The Bank of Canada Might Raise Rates on October 28 — What It Means for London, Ontario Buyers and Sellers

For more than a year, the question was when rates would fall. This week, that question flipped. Major forecasters are now calling for the Bank of Canada to RAISE rates — starting at its October 28 decision. Here's what we know, what we don't, and what it means for real estate in London, Ontario.

**Where we stand**

The Bank of Canada has held its policy rate at 2.25% since October 2025 — seven straight holds. Inflation, though, is no longer cooperating. The consumer price index ran at 3.0% year over year in August, sitting right at the top of the Bank's 1–3% control range. Prices excluding gasoline rose 2.4%, up from 2.2% in July — a sign that pressure outside energy is building, not easing.

Governor Tiff Macklem said in September that the risks of higher inflation have increased, and the Bank is prepared to adjust if inflation threatens to spread.

**Why the hike calls are growing**

- UBS Global Research revised its outlook this week: it now expects a quarter-point hike on October 28 and another in January, taking the policy rate to 2.75%. UBS previously expected no hikes until 2027.

- Manulife Financial reversed its forecast too, calling for two hikes before year-end 2026 (October 28 and December 9).

- Scotiabank and National Bank lean hawkish; markets now assign a 76% probability to an October hike.

- On the other side: CIBC and BMO expect the Bank to hold in October, Desjardins doesn't see hikes until early 2027, and Capital Economics argues a soft economy will limit how far rates can go.

Notably, everyone is watching the September inflation report, due October 19 — nine days before the decision. UBS expects it to show 3.3%.

**What a quarter-point hike would actually do**

The big banks' prime rate is 4.45% today and would move to roughly 4.70% after a quarter-point hike. Prime drives variable-rate mortgages and lines of credit. On a variable mortgage, each quarter-point adds roughly $13 a month for every $100,000 borrowed — about $40 a month on a $300,000 balance, $67 on $500,000.

Fixed rates work differently: they track bond yields, not the policy rate. And bond yields are already rising — the five-year bond yield hit a 52-week high near 3.73% in late September. Several lenders have already raised fixed rates. As of early October, the lowest five-year fixed rate in London sits at 4.59%, and the lowest five-year variable at 3.45%.

**What this means for buyers in London**

If you're waiting to buy, don't wait on a cut that may never come. A pre-approval based on today's numbers is worth more than a hope for tomorrow's. Two practical steps:

1. If you're going variable, stress-test your budget at prime + 0.5% — roughly 4.95% — so a hike doesn't catch you off guard.

2. If you prefer fixed, act before rate holds expire. Fixed rates are already moving; the Bank's decision only affects what comes next.

Remember London's segments, too: condos currently carry about six and a half months of inventory — buyers' territory, with room to negotiate — while detached homes sit in balanced territory. Rate pressure affects both, but negotiating room differs.

**What this means for sellers in London**

Buyers with stretched budgets move faster — and cut offers sooner — when borrowing costs rise. Pricing right from day one matters even more in that environment: across London, homes that started at the right price sold close to asking, while overpriced listings got there weeks later and thousands less. Higher rates punish wishful pricing.

**The bottom line**

Nobody knows what the Bank will do on October 28 — the data between now and then, especially the October 19 inflation report, will decide it. But the era of "rates can only go down" is over. The buyers and sellers who win this fall are the ones building plans on real numbers, in their real segment, today — not on a forecast.

We run those numbers with every client, every week. That's what keeps a market move from becoming a surprise.

— Paola Cano & Jose Ramirez, Thrive Realty Group Inc., Brokerage, London, Ontario.