Next Wednesday, October 28, at 9:45 in the morning, the Bank of Canada will make its next interest-rate decision. And for the first time in about three years, an actual rate HIKE is seriously on the table.
What changed?
For weeks, the story was simple: the Bank would do nothing. Its policy rate has sat at 2.25% since October 2025, after seven straight "hold" decisions. But two reports flipped the conversation:
- Inflation came in hot. September inflation hit 3.1% (Statistics Canada, published October 19) — mostly because of gasoline, which costs 27.8% more than a year ago. Without gasoline, inflation was just 2.2% and still cooling.
- Forecasters flipped. On October 22, Oxford Economics changed its call: it now expects a quarter-point hike on October 28 AND another in December, taking the rate to 2.75%. Financial markets are now pricing in about an 85% chance of a hike on October 28 (Reuters, October 20).
But it is not a done deal. On that same day, October 22, the C.D. Howe Institute's panel of economists — including the chief economists of Canada's six biggest banks — voted 6 to 1 that the Bank should HOLD at 2.25%. They point to a shaky job market: Canada lost 68,300 jobs in September, and unemployment rose to 6.5% (Statistics Canada).
The most important line in this article: an 85% market probability is a BET, not a decision. Markets can and do change their minds before Wednesday.
What would a hike mean for your money?
First, some plain English on how mortgage rates work in Canada:
- Variable-rate mortgages follow the Bank of Canada directly. If the Bank raises its rate by a quarter of a percentage point (0.25%), your variable rate usually rises too — within days. On a $500,000 mortgage, a 0.25% rise means roughly $67 more per month (about $13.47 per $100,000 of mortgage, per nesto.ca, October 22, 2026).
- Fixed-rate mortgages do NOT follow the Bank of Canada — they follow the price of government bonds. And those have already been climbing. Bond yields hit a 52-week high in late September, and several lenders raised their fixed rates this month. BMO's advertised 5-year fixed special reached 5.14% on October 7; TD's reached 5.39% on October 15.
So a hike would lift variable payments right away — but fixed rates are already moving regardless.
Three things to do before Wednesday
- If your mortgage renews within the next 120 days: ask your lender or mortgage advisor for a FREE rate hold. It locks in today's rate for 120 days, even if rates go up on Wednesday. No cost, no risk — this is the single smartest move.
- If you're shopping for a home: get (or refresh) your pre-approval BEFORE Wednesday. A pre-approval typically locks your rate for 90 to 120 days. Our mortgage advisor Carlos Tovar can do this quickly — call or text him at +1 519-494-2221.
- Don't let fear make the decision. A quarter-point rise is real money, but on a $500,000 mortgage it's about $67 a month — it shouldn't decide whether you buy the right home. What matters most is your timeline, your income, and finding the right house at the right price.
What does this mean for London?
London is firmly a buyer's market right now. In September, 561 homes sold (up 5.3% from last year, LSTAR), but the benchmark price was $552,500 — down 2.6% from a year ago — with almost 6 months of inventory on the market. Buyers have choice and negotiating power.
Here's the silver lining: if rates rise, some buyers will pause — and that's exactly when prepared buyers find the best deals. A prepared buyer with a locked-in rate can negotiate a price that fits the new reality, while everyone else is still doing the math.
Questions about your situation? Jose Ramirez and I explain everything in plain words — no jargon, no pressure. Message us and we'll walk through your numbers together.
— Paola Cano & Jose Ramirez, Thrive Realty Group Inc., Brokerage, London, Ontario.