Bank of Canada decision Wednesday: what should you do about your mortgage?
On Wednesday, October 28, the Bank of Canada will announce its next policy rate decision. Whenever this date approaches, the questions start piling up: “Is now the right time to renew?” “Will my variable rate go up?” Here’s what you need to know to get a clear picture, without panicking.
Where do things stand?
The policy rate is at 2.25%, unchanged since October 2025. Most major banks expect it to remain stable through the end of 2026, with a first increase possible in 2027. A few institutions, including Scotiabank and National Bank, are expecting increases sooner. In short, the experts don’t agree—and that’s precisely why it’s better to prepare than to bet.
Why fixed rates don’t follow the policy rate
This is what surprises most homeowners. Fixed rates don’t depend directly on the Bank of Canada, but on the yield of five-year Government of Canada bonds. That yield hit a 52-week high in late September, which explains why fixed rates rose this fall, even without an increase in the policy rate. Based on the rates posted by nesto in early October, five-year fixed rates were around 4.59%, and variable rates were 3.41%. These are the best advertised rates, not guaranteed rates: your actual rate depends on your profile.
If your renewal is coming up
If your term expires within the next six months, don’t wait until the last minute. Many lenders offer a rate hold, often for 90 to 120 days, which protects you if rates rise while you compare options. Your current lender will send you a renewal offer, but it isn’t always the best one: comparing offers could save you thousands of dollars over the term.
Fixed or variable?
There’s no one-size-fits-all answer. A fixed rate offers peace of mind: stable payments and a predictable budget. A variable rate costs less today, but your payment or the portion going toward interest could change if the Bank raises its rate. The real question isn’t “Which rate will be lowest?” but “What payment can I afford if rates rise by 0.5 or 1 percentage point?” Put it to the test: if that increase would put a strain on your budget, a fixed rate deserves serious consideration.
Three things to do this week
- Find out when your term ends and what your loan balance is.
- Calculate your payment at a rate 0.5 percentage points higher.
- Talk to a mortgage broker before signing anything.
Need a second opinion?
Every situation is different: income, down payment, short-term plans, risk tolerance. I’ve been a mortgage broker for 15 years, and I compare offers from several lenders for you, at no cost to the borrower in most cases. Contact me for an analysis of your renewal before the end of the month.
This article is for informational purposes only and does not constitute personalized financial advice. The rates mentioned are indicative and may have changed.