THE BANK OF CANADA RAISES ITS RATE FOR THE FIRST TIME SINCE JULY 2023
The Bank of Canada raised its overnight rate by a quarter of a percentage point to 2.50 per cent on Wednesday, October 28. It is the first increase since July 2023. On Thursday, Canada’s six largest banks followed by moving prime from 4.45 per cent to 4.70 per cent.
The Bank said high energy prices, tied to the conflict in the Middle East, could spill over into the prices of other goods and services. It now expects inflation to return to its 2 per cent target in the middle of 2028. Governor Tiff Macklem said there could be a need to raise the policy rate further, but that the Bank will proceed carefully and take decisions one meeting at a time. The next decision is December 9. Some bank economists expect at least one more increase, in December or early 2027, and several describe a run of steep increases like 2022 as unlikely, given weak economic growth.
Rates move in both directions. Over the last 25 years, the Bank of Canada has cut its rate about as often as it has raised it, based on the Bank’s own historical data.
What this means for your mortgage: If you have a variable rate with a fixed payment, your payment stays the same, but more of each payment now goes to interest and less to principal. If your payment moves with prime, it went up this week. On a $500,000 mortgage amortized over 25 years, a quarter-point change works out to roughly $70 a month for a payment that gets recalculated. If you have a fixed rate, nothing changes until your renewal.
CMHC EXPECTS ONTARIO MORTGAGE ARREARS TO KEEP RISING INTO MID-2027
Canada Mortgage and Housing Corporation (CMHC) expects mortgage arrears in Ontario to keep rising until the middle of 2027, with the largest and most sustained increase of any province. Ontario’s arrears rate was 0.32 per cent in the second quarter of 2026, up from 0.21 per cent a year earlier. That is about three in every thousand mortgages. A mortgage is considered in arrears when payments are 90 days or more behind.
CMHC says the pressure is concentrated in the Greater Toronto and Hamilton area and southwestern Ontario, where trade tensions are weighing on auto manufacturing. It expects “persistent, above-average delinquency growth” in Toronto through late 2026 and into 2027. Weak housing conditions are also making it harder for stressed owners to sell or refinance their way out of difficulty.
CMHC’s deputy chief economist said Canada “is not facing a broad mortgage crisis,” and arrears remain below historical peaks. A report from bank economists found that mortgages making up roughly 5 to 6 per cent of the market saw payments jump more than 40 per cent in 2026. The same report expects renewal payment increases to ease from February 2027, and found that serious delinquencies on credit cards and lines of credit held by mortgage borrowers have levelled off. CMHC also says the largest renewal shock has likely passed.
What this means for your mortgage: Arrears in Ontario are still rare, but the direction is up, and the strain is showing first among borrowers who renew at higher rates, in a market where selling is harder. If you are renewing in the next year, the two numbers to have in front of you are your current rate and your renewal date.
THE BANK OF CANADA SEES A SUBDUED HOUSING MARKET THROUGH 2028
The Bank’s projections show residential real estate adding virtually nothing to economic growth through 2028. Its senior deputy governor called the housing outlook “subdued.” She said borrowing rates are weighing on the market and that this increase will add to that.
In September, the national average home price was down 1.6 per cent from a year earlier, to $666,538. National sales were down 7.7 per cent, according to the Canadian Real Estate Association. The association now expects national sales to fall 5.2 per cent this year, pointing to higher fixed mortgage rates and uncertainty about how high variable rates will go.
What this means for your mortgage: Higher borrowing costs reduce the size of mortgage a given income supports, and the Bank does not expect housing to pick up soon. In a market with softer prices and higher rates, the monthly payment on a given purchase price is the number to work from, not the price alone. These are national figures and are not a read on any single Toronto neighbourhood.
WHERE THINGS STAND
If you have a variable rate with a fixed payment, your payment stays the same, but more of it now goes to interest. If your payment moves with prime, it went up this week. If you have a fixed rate, nothing changes until renewal. If you’re renewing in the next year, know your current rate and your renewal date. Fixed rates have been rising since March, soon after the war with Iran began.
Call or text 249-480-1249. HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources: Bank of Canada, policy interest rate and key interest rate data; CMT News (Bloomberg), “Bank of Canada hikes to 2.5%, says more could be needed,” October 28, 2026; Canadian Mortgage Professional, “BoC hikes rates for the first time in over three years,” October 28, 2026; Canadian Mortgage Professional, “Here’s what Tiff Macklem said after the BoC’s rate hike,” October 28, 2026; Canadian Mortgage Professional, “The big question: How many more BoC rate hikes are ahead?” October 28, 2026; Canadian Mortgage Professional, “Prime rate hits 4.70% today as big banks act on BoC hike,” October 29, 2026; CMT News, “Ontario mortgage arrears expected to rise through mid-2027: CMHC,” October 27, 2026; Canadian Mortgage Professional, “CMHC sees Ontario mortgage arrears worsening well into 2027,” October 27, 2026; Canadian Mortgage Professional, “Canadian household credit defies renewal shock, CIBC finds,” October 28, 2026; CMT News, “Mortgage arrears to rise further, but losses manageable: CIBC,” October 27, 2026; CMT News (The Canadian Press), “BoC warns of ‘subdued’ outlook for housing market as rate hike raises borrowing costs,” October 28, 2026; CMT News (Bloomberg), “Rate hike kicks Canada’s housing market when it’s down,” October 29, 2026.