Bank of Canada Rate Announcement Tomorrow: Should You Be Worried About Your Mortgage?

The Bank of Canada is making another interest rate announcement tomorrow, October 28, and this one is getting quite a bit of attention.

Just a week ago, many economists expected the Bank to leave rates unchanged. Now, more than half of those surveyed by Reuters are predicting a 0.25% increase.

So what changed? And more importantly, what does this mean if you have a mortgage, you're coming up for renewal, or you're planning to buy a home?

Before making any decisions, let's look at the numbers.

Why Are Interest Rates Expected to Go Up Again?

Canada's latest inflation report showed prices increased by 3.1% compared to last year.

At first glance, that doesn't sound encouraging, especially when the Bank of Canada's inflation target is 2%.

But there's something interesting behind that number.

Gasoline prices increased by 27.8% compared to September last year. When you remove gasoline from the calculation, inflation was actually 2.2%.

Because gasoline doesn't just affect how much we pay to fill up our vehicles.

Think about how products get to grocery stores. Trucks need fuel to transport food, clothing, building materials, and just about everything else we purchase.

When fuel costs increase, businesses pay more to transport their products. Those additional expenses can eventually get passed down to consumers through higher prices.

Even services can become more expensive. Contractors, delivery companies, and other businesses that rely on vehicles may need to adjust their pricing to cover higher operating costs.

That's how an increase in gasoline prices can eventually affect the cost of everyday living, even if you don't drive.

And that's what the Bank of Canada is concerned about.

The interesting part is that the Bank's preferred measures of underlying inflation were actually lower, at 1.8% and 1.9%.

So we're seeing two different things happening. Underlying inflation is showing signs of improvement, but higher energy prices could create additional inflationary pressure if those costs spread throughout the economy.

That's what makes tomorrow's decision so interesting.

Will the Bank of Canada Raise Rates Tomorrow?

According to a Reuters survey conducted October 21 to 23, 19 out of 34 economists expect the Bank of Canada to increase its policy rate from 2.25% to 2.50%.

That's approximately 56%.

In other words, there's still a meaningful possibility that rates won't change at all.

There's also another side to the story.

Canada lost 68,300 jobs in September, and unemployment was sitting at 6.5%.

Increasing interest rates when the job market is already showing weakness could create additional pressure on households and businesses.

The Bank has to weigh both sides before making its decision.

If You Have a Variable-Rate Mortgage

This is where tomorrow's announcement could have the most immediate impact.

If the Bank increases its policy rate by 0.25%, lenders would generally increase their prime lending rates by the same amount.

On a $500,000 mortgage, that could mean approximately $70 more per month, depending on your remaining amortization and mortgage structure.

However, not all variable-rate mortgages work the same way.

Some have adjustable payments, meaning your monthly payment increases when rates go up.

Others have fixed payments, meaning your payment may remain unchanged while more of it goes toward interest and less toward principal.

That's an important difference.

If you currently have a variable mortgage, I wouldn't automatically recommend switching to fixed simply because rates might increase tomorrow.

I'd want to look at your existing rate, remaining mortgage term, payment structure, and what it would cost to make a change.

Sometimes staying with your current mortgage makes more sense. Other times, restructuring may be worth considering.

If You Have a Fixed-Rate Mortgage

Here's something worth remembering.

The Bank of Canada doesn't directly set fixed mortgage rates.

Fixed rates are influenced more by the bond market, particularly Government of Canada bond yields.

That means even if the Bank raises its policy rate tomorrow, fixed mortgage rates won't necessarily increase by the same amount.

And if you're already in a fixed-rate mortgage, your existing rate and payment won't change because of tomorrow's announcement.

Where things get interesting is if you're approaching renewal.

Your lender might send you a renewal offer, but that doesn't necessarily mean it's the most competitive option available.

Before accepting, it's worth comparing what other lenders are offering and looking at whether your current mortgage structure still makes sense.

You may have more options than you realize.

What If You're Planning to Buy a Home?

If you're currently shopping for a home, you might be wondering whether you should wait until there's more clarity on interest rates.

It's a reasonable question.

But interest rates are only one part of the equation.

The purchase price, down payment, monthly expenses, and how much mortgage you qualify for are just as important.

For example, a lower mortgage rate doesn't automatically mean you'll be in a better position if home prices increase while you're waiting.

On the other hand, a lower home price doesn't necessarily make a property affordable if the monthly payments are beyond your comfort level.

This is why I always prefer looking at the complete numbers instead of focusing on one interest rate.

If you're actively looking, getting pre-approved and discussing a rate hold can give you a better understanding of your options.

A rate hold may protect you against a rate increase for a limited period, while some lenders will also allow you to benefit if rates come down before closing.

The terms vary by lender, so it's important to understand exactly what you're getting.

What If Your Mortgage Isn't Due for Renewal Yet?

You don't necessarily have to wait until your renewal date to review your mortgage.

Depending on your current rate, remaining term, mortgage balance, and other financial obligations, there may be opportunities worth exploring before renewal.

That doesn't mean breaking your mortgage is always the right decision.

There could be penalties and other costs that make leaving your existing mortgage unattractive.

But if your financial situation has changed, reviewing the numbers can help determine whether maintaining your current mortgage or making adjustments would put you in a better position.

Sometimes the best advice is to leave everything exactly as it is.

So, Should You Be Worried About Tomorrow?

I wouldn't make a major mortgage decision based on a single interest rate announcement.

Having worked in the mortgage industry since 2011, including reviewing mortgage applications, underwriting, and helping clients navigate different lending situations, one thing I've learned is that there's no single mortgage strategy that works for everyone.

I've seen how the same interest rate environment can affect homeowners differently, depending on their mortgage structure, financial obligations, and long-term plans.

Even if the Bank increases rates by 0.25%, that doesn't necessarily mean we're heading into another prolonged period of rising mortgage rates.

And if the Bank keeps rates unchanged, that doesn't automatically mean borrowing costs will start falling.

What matters is how your mortgage fits into your overall financial picture.

For homeowners, that means understanding your current mortgage and whether there's room to improve your cash flow.

For buyers, it means knowing what you can comfortably afford today rather than trying to guess where interest rates or home prices might go next.

For those approaching renewal, it means comparing your options before signing another mortgage agreement.

Let's Talk Numbers

Whether you're buying, renewing, refinancing, or simply wondering if your current mortgage still makes sense, it's worth having a conversation.

We can review your existing mortgage, compare your options, and look at the actual numbers before deciding what makes sense.

You don't need to predict interest rates to make an informed mortgage decision.