The Bank of Canada decides October 28 — what a quarter-point hike adds to a variable mortgage
Two big banks expect a hike, four expect a hold. Here's what 25 and 50 basis points would do to payments on a $400,000 variable mortgage, and how to check where you stand before the announcement.
The Bank of Canada has held its policy rate at 2.25% since October 2025, most recently on September 2. Its next decision lands on October 28, alongside a fresh Monetary Policy Report. For the first time in a while, a hike is a live possibility — and variable-rate borrowers feel it the same day.
Why the Bank is even considering it
Inflation has been running around 3%, driven mostly by gasoline. Excluding gasoline, the Bank says inflation was 2.2% in July, with core measures close to 2%. But it also warned that "upside risks to inflation have increased" while new tariffs make growth more uncertain. That's a hard mix: prices pushing up, the economy pushing down.
Forecasters are split:
- National Bank and Scotiabank were calling for a move to 2.50% in October and 2.75% by year-end.
- BMO, CIBC, RBC and TD expected a hold through December.
- Capital Economics sees two quarter-point hikes to 2.75%, then a limit on how far the Bank can go given weak growth and a soft job market.
- Bond markets are pricing in roughly 1.25 percentage points of hikes by the end of 2027 — much more than most economists.
No one knows what the Bank will do on the 28th. The useful question isn't "hike or hold?" — it's "could my budget absorb it either way?"
What it means for a variable mortgage
Lenders move prime the same day the Bank moves. Prime has sat at 4.45% since October 2025. A common variable rate is prime minus 1.00%, or about 3.45% today (yours may differ — check your own contract).
Here's the payment on a $400,000 balance over a 25-year amortization:
| Scenario | Variable rate | Monthly payment | Change |
|---|---|---|---|
| Today | 3.45% | about $1,992 | — |
| One hike (+0.25) | 3.70% | about $2,046 | +$54 |
| Two hikes (+0.50) | 3.95% | about $2,100 | +$109 |
These are simple estimates using monthly compounding, so your lender's figure will differ by a few dollars. The pattern holds: roughly $13 a month per $100,000 for every quarter-point.
Check which kind of variable you have
- Adjustable-rate: your payment changes right away. The table above is what you'd see on your statement.
- Fixed-payment variable: your payment stays put, but more of it goes to interest and less to principal. The cost shows up later, as a longer amortization or a bigger renewal shock. Many borrowers don't realize this until they get the annual statement.
Either way, the money is the same. It just arrives on a different schedule.
Before October 28
- Find your rate and type. Log in or call your lender and confirm whether your payment is adjustable or fixed.
- Test a +0.50 scenario. If $109 a month per $400,000 is manageable, you're fine. If it isn't, now is the time to act, not after the announcement.
- Ask about converting to fixed. Many lenders let you lock in mid-term, but the rate offered will be today's fixed rate, which has already moved up (see why fixed rates are rising while the Bank sits still).
- Build the buffer first. Redirecting even the $54 you'd owe after one hike into a savings account now means you've already practised the payment.
Check your own numbers
The home affordability calculator shows how much house a given income supports at different rates, and the housing cost burden tool shows whether a higher payment would push you past the 30%-of-income line.
Rates, forecasts and inflation figures are drawn from the Bank of Canada's September 2 release and recent bank and economist commentary. Check your lender for your exact rate and payment terms. This is general information, not personalized financial advice.