The Bank of Canada Raised Rates to 2.5%. Here's What It Costs Your GTA Mortgage

On October 28, 2026, the Bank of Canada's October 2026 rate announcement raised the policy rate by a quarter point to 2.5%, its first increase since the Bank of Canada's July 2023 rate announcement. For GTA homeowners with an adjustable variable mortgage, that is about $14 more a month for every $100,000 owed on a 25-year amortization. If your variable payment is fixed, the payment stays, but more of it goes to interest. Lines of credit cost more within days. A fixed mortgage you already have does not change.

I'm Moe Asgarian, a broker with Team Asgarian at RE/MAX Hallmark Realty, and I have worked the Toronto and York Region market for more than 15 years. For two years the story was that rates were on their way down. This morning that story turned. A quarter point is not a crisis. But a change of direction matters more than its size, and what it means for you depends on where you stand: carrying a variable mortgage, renewing soon, buying, or selling. So let's take them one at a time, starting with your own money.

If You Have a Variable Mortgage or a Line of Credit

Variable mortgages and home equity lines of credit are priced off your lender's prime rate. Before today, the prime rate on TD's prime rate page was 4.45%, and the big banks set prime together. They normally move it by the same amount as the Bank of Canada, usually within a day, which would take it to 4.70%. Don't guess the date: your lender will send a notice with the new rate and when it starts.

Here is what that looks like on a real GTA balance. Take a $1.2 million variable mortgage, which is not unusual on a detached house in Richmond Hill, North York or Vaughan. If its rate goes from 4.45% to 4.70% on a 25-year amortization, the monthly payment goes from about $6,608 to about $6,776. That is roughly $168 more every month, or about $2,000 a year, from one announcement. On a $750,000 balance the increase is about $105 a month, and on $500,000 about $70. These are our own calculations, using Canadian semi-annual compounding. Your lender's figure will be a little different, depending on your discount and how many years you have left.

Not every variable mortgage reacts the same way. With an adjustable-payment mortgage, the higher payment shows up on your next statement. With a fixed-payment variable, which several big banks offer, the payment does not move, but more of it goes to interest and less to principal, so the mortgage takes longer to pay off. If that is you, call your lender and ask one question: what is my trigger rate, and how close am I to it?

A home equity line of credit is usually interest-only, so you feel it right away. Every $100,000 you have drawn costs about $21 more a month. If you used your line of credit for a down payment on a second property or for a renovation, this is the week to look at that balance with fresh eyes.

My advice: if one more quarter point would really strain your monthly budget, ask your lender today what it would cost to convert to a fixed term, and get it in writing. If you have room in the budget, staying variable is still a reasonable choice. Just make it a choice, not something that happens to you.

If Your Mortgage Renews in the Next Year

Fixed mortgage rates don't follow the Bank of Canada directly. They follow the bond market, mostly the five-year Government of Canada bond yield. The Bank of Canada's October 2026 rate announcement itself notes that bond yields in advanced economies have risen since July. That is the same pressure we wrote about in The Bank of Canada Held Rates in September 2026: fixed rates can climb even when the Bank stands still, and now it hasn't stood still.

If your renewal is in the next 12 months, do three things. Start the conversation early, because a rate hold protects you while you shop. Get quotes from at least three lenders, including a mortgage broker, and never just sign the renewal letter your bank mails you; that first offer is rarely the best one. And be honest about what you can live with. The Bank of Canada's October 2026 rate announcement says there could be a need to raise rates further, and it expects CPI inflation to average 3% in 2027. If a higher payment two years from now would keep you up at night, a fixed term buys you sleep. If your income has room and you can ride out another increase, variable can still make sense.

If You Are Buying a Home

For buyers, the bigger hit is to approval, not to the payment. Under the OSFI minimum qualifying rate for uninsured mortgages, you have to qualify at the higher of 5.25% or your contract rate plus two percentage points. When your contract rate rises, the stress-test rate rises with it.

Here is the math. Picture an uninsured buyer qualifying on a variable rate that just went from 4.45% to 4.70%. Their qualifying rate moves from 6.45% to 6.70%. For the same monthly payment the lender is willing to approve, that is about $22,000 less mortgage for every $1 million borrowed on a 25-year amortization (again, our own calculation). For a family looking at a detached house in Thornhill or Markham with a $1.5 million mortgage in mind, that is about $33,000 of buying power gone before lunch.

So this week, ask your lender or broker to re-run your pre-approval at today's rates. Make sure your rate hold is in writing and check when it expires. And keep a financing condition in your offers unless your lender has signed off on the exact property. A firm offer on an old pre-approval is how good families end up in real trouble.

There is a quieter side to this too. As of TRREB's September 2026 Market Watch, GTA home sales were 5,040, down 9% from a year earlier, and the average selling price was $1,006,409, down 5.1%, with the benchmark price down 4.7%. A slower market with fewer qualified buyers means that if you can qualify, you still have room to negotiate on price, closing date and conditions. Higher rates take some buyers out of the race. For the ones who stay in, that is not all bad news.

If You Are Selling a Home

Sellers should read the buyer math above carefully, but not too widely. That squeeze lands on buyers who qualify on a variable rate, and they tend to be uninsured buyers in the higher price ranges. Buyers who lock in a fixed rate feel the bond market, not today's decision. So this announcement on its own is not a reason to cut your price.

What it does change is how carefully you set it. Your price still has to come from current comparable sales and the listings you are actually competing with, not from what a neighbour got last spring. Watch the search brackets: a home listed just over $1.5 million or $2 million can drop out of the search of a buyer whose approval just slipped under that line. Price it to sell while the listing is new, in its first couple of weeks. A home that starts too high and then chases the market down gives buyers a reason to wait for the next cut.

We flagged this risk on October 9 in Is the Bank of Canada About to Raise Rates Again?. If you plan to list this fall or next spring, now is a good time to have the pricing conversation with real numbers in front of you, including what your likely buyer can borrow this month.

What the Bank of Canada Decided, and Why

According to the Bank of Canada's October 2026 rate announcement, the target for the overnight rate is now 2.5%, the Bank Rate is 2.75% and the deposit rate is 2.45%. The Bank said inflation has been higher and more persistent than it projected in July: consumer prices have risen around 3% a year since April, and it expects that to rise to about 3½% by the end of the year.

Here is the detail that matters. The Bank of Canada's October 2026 rate announcement puts inflation excluding gasoline at 2.2% in September, with its core measures close to 2%. In other words, this hike is not about prices running out of control everywhere. It is about stopping high energy prices from spreading into everything else. At the same time, the same Bank of Canada October 2026 announcement shows an economy stronger than the Bank expected, with growth of 3.3% in the second quarter, about 2% tracking in the third, and unemployment around 6½% for several months.

The Bank also said in the Bank of Canada's October 2026 rate announcement that it could need to raise the rate further, and that it will move carefully because the uncertainty is high, from new U.S. tariffs to the conflict in the Middle East. The next decision is on December 9, 2026. For the American side of the bond-market story, read The Fed Raised Rates in September 2026: Will Canadian Mortgages Get More Expensive?.

What to Do This Week

If you have a variable mortgage, find your new payment or your trigger rate on your lender's notice. If you have a line of credit, check how much you have drawn and whether paying it down now makes sense. If you renew within a year, get three quotes and a rate hold. If you are buying, re-run your pre-approval before your next offer. If you are selling, price to today's comparables and today's buyers, not last spring's. For the background on fixed versus variable, renewals and qualifying, browse our mortgages and rates guides.

If you want these numbers for your own situation, I will do a free payment and budget check with you: what your payment, your renewal options or your purchase budget look like at today's rates. Bring your balance, your rate and your renewal date, or your pre-approval letter. Fill out the form at the bottom of this page or book a free consultation with Team Asgarian, and we will go through it together, line by line.

Stay well and take care.