Three weeks ago the safe assumption was that the Bank of Canada would sit still until spring, and that assumption is gone. On Wednesday the U.S. Federal Reserve raised its rate by a quarter point, its first increase in more than three years, and by Thursday the market was pricing the Bank of Canada's October 28 decision as a coin flip, with the odds tilted slightly toward a hike (CP24 and The Canadian Press, September 18, 2026). If you have a variable-rate mortgage or a fixed term that renews in the next year, here is what that shift means for your monthly numbers and what I would do about it now.
How we got from a hold to a coin flip in three weeks
On September 2 the Bank held its policy rate at 2.25 per cent for the seventh straight decision, with the market putting the odds of a hold at 94 per cent going in (Bank of Canada; LSEG data cited by The Canadian Press). Two things changed the picture. The first is inflation: Statistics Canada reported on September 14 that the consumer price index rose 3.0 per cent in August from a year earlier, the same pace as July, with rent up 2.8 per cent and Ontario leading that increase (Statistics Canada, The Daily, September 14, 2026). Three per cent is the top of the Bank's comfort range.
The second is what the Bank itself said. In the summary of its September deliberations, released on September 16, the governing council wrote that if higher energy prices spilled over into other parts of the CPI, "it could require a monetary policy response to prevent broad-based inflation from setting in" (Bank of Canada, Summary of Governing Council Deliberations, September 16, 2026). Oil is above US$100 a barrel because of the conflict in the Middle East, and as RBC's Claire Fan put it, if one thing is driving the pricing of the October meeting, it is oil. Most economists still expect the Bank to wait until early 2027, but a hold is no longer the only scenario worth planning for.
If you are on a variable rate
Prime sits at 4.45 per cent and the best five-year variable rates are around 3.40 per cent (Ratehub, September 18, 2026), and a quarter-point hike moves both by the same amount. On a $700,000 mortgage with a 25-year amortization, a variable rate of 3.40 per cent costs about $3,458 a month and 3.65 per cent costs about $3,551, a difference of roughly $93 a month; a second quarter point would take it to about $3,644. Those are real dollars, but not the kind of jump that upends a household budget, whatever the headlines suggest. The larger risk sits with anyone on a variable mortgage with a fixed payment, where the payment stays the same while more of it goes to interest and the amortization quietly stretches. If that is your mortgage, ask your lender for your trigger rate and how much principal you are actually paying down each month.
If your mortgage renews in the next twelve months
This is the group I am most concerned about, and it has little to do with October. Many of the mortgages taken out in the busy fall of 2021 renew this fall and through 2027, and those borrowers locked five-year fixed rates near 2 per cent. A $700,000 mortgage taken at 2 per cent in the fall of 2021 carries a payment of about $2,964 and a balance today near $586,000, and renewed over the remaining 20 years at this week's best five-year fixed rate of 4.24 per cent, the payment becomes about $3,616, roughly $650 a month more. CMHC reports that borrowers who renewed over the past eighteen months saw payments rise by an average of $375 a month (CMHC, cited by Money.ca, September 2026), and the 2021 cohort is starting from a lower rate than most of them did.
The big banks raised five-year fixed rates last week after the Canada five-year bond yield climbed to about 3.65 per cent, its highest since 2024 (Canadian Mortgage Trends, September 17 and 18, 2026), so if your renewal is within 120 days, get a written rate hold from your existing lender and at least one other today. A hold costs nothing. And do not sign the first renewal letter that arrives in the mail, because the rate printed on it is rarely the lender's best, and a broker who shops it can usually do better for a borrower with strong equity.
If you are buying or selling this fall
For buyers, lock a pre-approval with a rate hold and run your numbers at a half point above today's rate, so an October surprise does not change what you can afford. For sellers, August showed inventory across the GTA tightening faster than sales, and more so here in Markham (TRREB Market Watch, August 2026), which still favours a well-priced listing, but October's buyers are carrying slightly higher borrowing costs than August's, so price to the last sixty days of sales rather than to the spring.
Whatever the Bank decides on October 28, the useful work happens before then: know your trigger rate if you are variable, get a rate hold if you renew or buy within four months, and shop the renewal rather than signing the letter. A quarter point is manageable for almost every household I work with; being surprised by it is what causes trouble. If you would like to run your own mortgage against these scenarios, call me and we will go through it together.