On October 28, 2026, the Bank of Canada raised its target for the overnight rate by 25 basis points, to 2.5%. The Bank Rate is now 2.75% and the deposit rate is 2.45%. Here is what the decision means for buyers and sellers in Orangeville, Mono, Caledon, Shelburne and Dufferin County.
Why the Bank raised the rate
The Bank says inflation has been higher than it expected. CPI inflation has been around 3% since April and is expected to rise to about 3.5% by the end of the year. Core inflation measures remain close to 2%, but the Bank says cost pressures are building and businesses are expected to pass more of them on over the next year.
Governing Council raised the rate to reduce the risk that high energy prices spread to the prices of other goods and services. The Bank says there could be a need to raise the policy rate further, but it agreed to proceed carefully.
What the economy looks like
Growth has been stronger than the Bank expected. GDP grew 3.3% in the second quarter, and recent indicators point to growth of about 2% in the third quarter. The unemployment rate has been around 6.5% for several months. The Bank expects growth to slow in the fourth quarter of 2026 because of new US tariffs, then pick up again in 2027. It expects housing to remain relatively weak.
What it means for buyers and sellers
Variable-rate mortgages and HELOCs
The policy rate is the starting point for the prime rate that lenders use for variable-rate mortgages and lines of credit. When the Bank raises its rate, variable payments generally climb. If you have a variable-rate mortgage or a HELOC, ask your lender how this change affects your payment and when it takes effect.
Fixed-rate mortgages
Fixed rates follow government bond yields more than the policy rate, and they often move ahead of a Bank announcement. The Bank's release notes that global financial conditions have tightened since July and that advanced economy sovereign bond yields are higher. Ask your lender what fixed rate they can offer today and how long that offer will hold.
If you are buying
Know your budget before you start looking. Get pre-approved to see how much you can borrow at today's rates, so you can act quickly when you find the right home.
If you are selling
Higher borrowing costs affect how much buyers can comfortably spend, so realistic pricing matters more when rates are rising. To see where your home sits in today's market, start with a home valuation.
What comes next
The Bank's next scheduled announcement of its overnight rate target is December 9, 2026. Its next Monetary Policy Report is due January 27, 2027. The release points to developments in the Middle East, energy prices and how businesses respond to cost pressures as the main sources of uncertainty.