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The Bank of Canada just raised rates for the first time since 2023

On Wednesday, the Bank of Canada raised its policy rate by a quarter point, to 2.5%. It’s the first increase since July 2023, and the Bank’s first rate change of any kind in a year.

The Bank’s main concern is energy prices. It wants to keep high oil and gas costs from pushing up the price of everything else. It also raised its 2027 inflation forecast to 3.1%, up from 2.0% in July. More increases are possible, though the Bank said it will move carefully. The next decision is December 9th.

Canada’s big banks usually match a Bank of Canada move within a few days. That would take the prime rate from 4.45%, where it has sat for a year, to about 4.70%. Variable-rate mortgages and home equity lines of credit are tied to prime, so those costs go up almost right away. Fixed rates were already rising before the announcement, with all six big banks raising some fixed rates since early September.

A few things worth knowing:

👉 If you’re buying, check when your pre-approval rate hold expires, or ask a mortgage professional for one now if you don’t have one. It’s also worth comparing fixed and variable again, since the gap between them has changed this fall. Higher rates tend to cool competition, so you may see fewer multiple offers.

👉 If you’re selling, some buyers will need to adjust their budgets, and others may wait to see what happens in December. Price for the market in front of you. The buyers still shopping are serious ones.

👉 If you’re staying put with a variable-rate mortgage, check your next statement. Depending on your mortgage, either your payment will rise or more of it will go toward interest. If you have a renewal coming up in the next year, start comparing options now. Many lenders let you hold a rate months before your renewal date.

Wondering what this hike means for your payment or your plans? Reply to this email and we’ll walk through it with you.

Talk soon,
CHRIS, PATRIC, JULIE, JASMINE, KRISTI & BRELL

P.S. Want to see how your payment would change if the Bank raises rates again in December? Reach out and we’ll run the numbers for you.

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