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Bank of Canada Rate Hike: What It Means for Borrowers and Savers in Canada
The Bank of Canada raised its policy rate to 2.50% on October 28, 2026. What it costs on lines of credit and variable mortgages, and why the big banks’ savings accounts, averaging 0.48%, may not follow.
What did the Bank of Canada announce?
On October 28, 2026, the Bank of Canada raised its policy interest rate by 0.25 percentage points, from 2.25% to 2.50%. It’s the first increase since 2023. The next decisions are December 9, 2026 and January 27, 2027.
Will the prime rate go up?
Yes. The big banks raised prime from 4.45% to 4.70%, matching the Bank of Canada’s increase.
Prime-based debt (variable-rate mortgages, home equity lines of credit and most personal lines of credit) reprices as soon as your lender’s prime changes.
How much more will my line of credit cost?
About $25 a year for every $10,000 you owe at a prime-based rate.
| Prime-based balance | Extra interest a year (+0.25 points) |
|---|---|
| Top$10,000 | $25 |
| $25,000 | $63 |
| $50,000 | $125 |
| $100,000 | $250 |
What happens to a variable-rate mortgage?
If your payment adjusts with prime, it goes up. As an illustration, at a rate equal to prime (4.45% rising to 4.70%) over 25 years:
| Mortgage balance | Monthly payment at 4.45% | At 4.70% | Increase a month |
|---|---|---|---|
| Top$300,000 | $1,652 | $1,694 | $42 |
| $500,000 | $2,753 | $2,823 | $70 |
| $700,000 | $3,855 | $3,953 | $98 |
Many variable mortgages keep the payment fixed instead, so more of each payment goes to interest and less to the principal. Fixed-rate mortgages don’t change until renewal; fixed rates follow bond yields, not the policy rate directly.
Will my savings account rate go up?
Not automatically. Savings rates are set by each bank. The Big Six banks’ regular savings accounts average 0.48% on a $10,000 balance, 2.02 percentage points below the new policy rate. The best online rate we track is 2.80% (Oaken Savings Account).
| Big Six savings account | Regular rate on $10,000 |
|---|---|
| TopRBC High Interest eSavings | 0.65% |
| TD ePremium Savings | 0.55% |
| National Bank High Interest Savings | 0.55% |
| BMO Savings Amplifier | 0.45% |
| Scotia MomentumPLUS Savings | 0.40% |
| CIBC eAdvantage Savings | 0.30% |
| Oaken Savings Account (best online rate) | 2.80% |
We check all 15 savings accounts we track every week on the banks’ own pages; rates below were checked November 2, 2026, before the announcement. Our savings page always shows the latest.
Does the rate hike affect my credit card?
Usually not. Most Canadian credit cards have fixed rates, typically 19.99% to 22.99%, that don’t follow the policy rate. If you carry a card balance, the cheaper move is still a lower-rate card, a balance transfer or a consolidation loan.
What should I do after a rate increase?
Pay down prime-based debt first, since its cost has just risen. Check whether your savings are earning close to the best available rate rather than a big-bank average. If your variable mortgage has a fixed payment, ask your lender how the increase changes your amortization.
Keep reading
DebtWhat Is the Prime Rate in Canada Today?Canada’s prime rate is 4.7% and the Bank of Canada policy rate is 2.5% (changed October 28, 2026). What it means for lines of credit, variable mortgages and savings rates.
BankingCanada Savings Rate Report: October 2026Big banks pay an average 0.45% on savings while the best online rate is 2.80%, 6.2 times more. Our October data on savings, welcome rates and GICs, collected before the Bank of Canada’s October 28 rate increase.
DebtHow to Pay Off Credit Card Debt in CanadaFive ways to pay off credit card debt in Canada, with the math: paying $400 a month on $7,500 across three cards clears it in 1 yr 11 mo; the minimum only would take 24 yrs 10 mo.- BankingCanada Savings Rate Report: November 2026The first month after the Bank of Canada’s October 28 rate increase: big banks average 0.48% on savings, the best online rate is 2.80%, and the best 1-year GIC is 3.95%. What changed since October, welcome rates and GICs.
Official sources and further reading
- Bank of Canada: press release, October 28, 2026 ↗
- Bank of Canada: 2027 rate announcement schedule ↗
- RBC: prime rate ↗
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