Christmas Is Coming. So Is Another Bank of Canada Decision. Is Your Budget Ready?

Halloween is officially over, and before you know it, Christmas will be here.

Black Friday sales are just around the corner, Christmas shopping lists are getting longer, and many Canadian households are preparing for one of the most expensive times of the year.

But there's something else happening before Christmas that homeowners should keep an eye on.

After raising its policy rate by 0.25% on October 28, bringing it to 2.50%, the question many homeowners are asking is whether another increase could be coming.

Nobody knows for certain. But there are a few things worth thinking about before the holiday spending begins.

Could Another Interest Rate Increase Be Coming?

Having worked in the mortgage industry since 2011, I've seen how interest rate decisions can influence the choices homeowners make.

One thing I've learned is that when the Bank of Canada starts raising interest rates, we shouldn't automatically assume one increase will be the last.

Historically, rate increases have sometimes come in cycles.

Remember 2022? The Bank of Canada raised rates seven times that year, followed by three additional increases in 2023.

That doesn't mean we're about to experience another 2022. The economy is different today, and the Bank has to consider inflation, employment, consumer spending, and overall economic conditions before making another decision.

For homeowners with variable-rate mortgages or lines of credit tied to prime, another increase could mean higher borrowing costs.

Those with existing fixed-rate mortgages generally won't see their contracted interest rate change until their term ends.

Christmas Spending Is Fun. January's Credit Card Statement, Not So Much.

Let's talk about something that affects almost every household, regardless of whether you have a mortgage.

Christmas spending adds up quickly.

A few gifts here, a Black Friday deal there, family dinners, groceries, travel, and last-minute purchases.

Individually, they might not seem like much. But by January, they can add up to a balance that takes months to pay off.

And with the possibility of higher borrowing costs, carrying additional debt into the new year may put unnecessary pressure on your monthly budget.

Here are four things I'd consider before the holiday shopping begins.

1. Set a budget before the sales start

Decide how much you can comfortably spend on Christmas, including gifts, food, entertainment, and travel.

Black Friday discounts can be tempting, but saving 30% on something you weren't planning to buy isn't necessarily saving money.

2. Be careful with credit cards and payment plans

There's nothing wrong with using credit cards responsibly.

The concern is carrying balances that accumulate interest or taking on multiple buy-now-pay-later payments without considering how they fit into your budget.

A manageable purchase today can become an unnecessary monthly obligation tomorrow.

3. Don't forget about winter expenses

For Canadian homeowners, Christmas isn't the only expense to prepare for.

Heating, insurance, property taxes, vehicle maintenance, and unexpected home repairs can all affect your cash flow during the winter months.

Try to leave some room in your budget for expenses that have nothing to do with the holidays.

4. Protect your savings if you're planning to buy in 2027

If purchasing a home is part of your plan for next year, remember that lenders look at more than your income and down payment.

Credit card balances and existing monthly debt obligations can affect how much mortgage you qualify for.

Even if you're making your payments on time, a higher outstanding credit card balance could reduce your purchasing power.

That's something worth considering before making large holiday purchases.

Should You Switch Your Mortgage Before December?

With another rate announcement approaching, some homeowners may be wondering whether it's time to switch from variable to fixed, refinance, or make other changes to their mortgage.

If you're considering locking into a fixed rate, look beyond the rate itself. Consider the remaining term, the rate your lender is offering, your future plans, and the flexibility you may be giving up.

The same applies to refinancing or consolidating debt. Lower monthly payments don't automatically mean you'll save money over the long term.

Sometimes restructuring a mortgage makes sense. Sometimes leaving it alone is the better choice.

Understanding the difference is where working with an experienced mortgage professional can help.

Enjoy the Holidays. Just Plan Ahead.

Whether the Bank of Canada raises rates again in December or decides to hold, the holidays will still come with their usual expenses.

You don't need to stop enjoying Christmas or put your plans on hold because of interest rate headlines.

A little preparation now can help you start 2027 in a stronger financial position.

And if you're unsure how the recent rate changes might affect your mortgage, renewal, or plans to purchase a home, I'm always happy to help you review your options.

Sometimes the best financial decision is simply understanding where you stand.

Read the October Bank of Canada rate announcement

Review your mortgage renewal options

Explore our mortgage calculators

Learn about consolidating debt into your mortgage