On Wednesday, October 28, 2026, the Bank of Canada raised its main interest rate from 2.25% to 2.50%. That is a rise of one quarter of a percentage point. It is the first increase since July 2023.
If that headline made you nervous, take a breath. This article explains, in plain words, what changed, what did not change, and what to do next, depending on your situation in London, Ontario.
First, what is the Bank of Canada rate?
Think of it as the Bank of Canada's main lever for prices. When prices in Canada are rising too fast, the Bank raises this rate to slow spending down a little. When prices are calm, it may lower the rate to help spending.
This main rate is called the policy rate. It is the rate banks charge each other for very short term loans. From it, banks set their prime rate, which is the base rate they use to price variable mortgages and lines of credit for people like you.
Why did the Bank raise rates now?
The Bank is worried about inflation. Inflation is a simple word for this: how much prices, in general, have gone up compared with a year ago.
Statistics Canada reported that prices were 3.1% higher in September 2026 than in September 2025. The Bank of Canada aims to keep inflation close to 2%, inside a range of 1% to 3%. So 3.1% is just above that range.
Here is something most people do not know, and it changes how scary that number looks. The September rise was driven mostly by gasoline, which cost 27.8% more than a year earlier. Without gasoline, prices rose only 2.2% in the same year, which is inside the Bank's range. In other words, the headline number is real, but a large part of it came from fuel, not from everything you buy.
The Bank said it raised rates to reduce the risk that high energy prices spread to the prices of other goods and services. It also said more increases could be needed, but that it will proceed carefully. That is not a promise of another increase. The next scheduled decision is December 9, 2026.
What changed for you?
It depends on which group you are in. Read only the part that applies to you.
If you already have a variable mortgage
Your rate usually moves with the Bank's rate, so your payment may go up a little when your bank passes the increase to its prime rate. How much depends on your mortgage balance, how many years are left, and your contract with your lender, so do not trust one number you see online as your number. Ask your lender for your exact new payment.
If you already have a fixed mortgage
Nothing changes for you right now. Fixed means locked. Your rate and your payment stay the same until your term ends, no matter what the Bank did yesterday. The change will only matter when you renew, buy again, or break the mortgage early.
Here is a second fact most people do not know. New fixed mortgage rates do not follow the Bank of Canada directly. They follow the bond market, which is the market where investors buy and sell government loans. Because of that, a fixed rate quote does not automatically jump on the same day the Bank raises its rate. It can move on a different day, and in a different direction.
If you are buying a home in London now
A quarter point rise does not, by itself, decide whether you should buy. What matters more is the home, the price, and a payment you can live with.
Before you offer, get a pre-approval. That is a lender's written estimate of how much you can borrow, based on your income, your debts, and your credit. Then ask your mortgage broker or your bank to show you your payment at today's rate and at a slightly higher rate, so you know you can handle some movement.
In London, you still have time to compare. In September 2026, the London and St. Thomas Association of Realtors (LSTAR) reported 5.9 months of inventory across the region. In plain words, there were enough homes for sale that buyers could look around instead of rushing. Homes in the City of London sold for a median price of $537,000, and across the region homes sold for about 97% of their asking price. That means sellers were pricing close to what homes actually sold for, not far above it.
If you are selling a home in London
One rate announcement does not set your sale price. Buyers look at your home, your price, and what else is for sale nearby. In a market with this much choice, pricing your home at a realistic price, based on recent comparable sales in your neighbourhood, matters more than waiting for rate news.
If your mortgage renews soon
Do not wait until the last week. Talk to your lender or a mortgage broker early, compare more than one offer, and ask what your payment would be under each option. If your renewal is still months away, this announcement is a reason to start the conversation, not a reason to panic.
Questions people ask
Will house prices fall because rates went up?
Not necessarily. Prices depend on many things at once: how many homes are for sale, jobs, incomes, and how confident buyers feel. Higher rates can cool demand for some buyers, but they do not set a price for any single home in London.
Should I wait until December 9 to decide?
Only if your personal timing allows it, and only after you have run your own numbers. The December decision could be another increase, a hold, or something else, because it will depend on new economic data. A good plan works even if rates move a little either way.
Does this mean rates will keep rising all through 2027?
No one can promise that. The Bank now expects inflation to average around 3% in 2027 and to return close to 2% by the middle of 2028, but that is a forecast, not a guarantee. Forecasts change when new data arrives.
What to do next
1. Find out which group you are in: variable, fixed, buying, selling, or renewing soon.
2. Ask your lender or mortgage broker for your exact payment at today's rate and at a slightly higher rate.
3. Make your decision around the payment you can live with, not around a headline.
A quarter point is a real change, but it is a small step, not a reason to change a sound plan overnight. If you want help thinking through your next step in London, Ontario, talk to Paola Cano, Real Estate Broker, and Jose Ramirez first.
— Paola Cano & Jose Ramirez, Thrive Realty Group Inc., Brokerage, London, Ontario.