If you’ve been keeping an eye on interest rates, there’s an important update you’ll want to know about! The Bank of Canada has announced a 0.25 percentage-point increase to its overnight policy rate, bringing it to 2.50%. This could have an impact on Canadians with certain mortgages, lines of credit, and other borrowing products.
But what does this actually mean for you? Whether you already own a home, are thinking about buying, or have a mortgage renewal coming up, let’s break it down.
Have a Variable-Rate Mortgage? Pay Attention!
When the Bank of Canada raises its key interest rate, lenders typically respond by increasing their prime lending rates. According to the figures provided in this update, Canada's prime rate is expected to move from 4.45% to 4.70%.
If you have a variable-rate mortgage, the effect on your budget depends on the type of mortgage you hold.
If your payments adjust with interest rates: You may see your regular mortgage payment increase, meaning you'll need to account for a little more money going toward your housing costs each month.
If your payments stay the same: Some variable-rate mortgages maintain the same scheduled payment when rates change. In that case, a larger portion of your payment may go toward interest instead of reducing your principal. Depending on your mortgage terms, this could also affect how quickly you pay down your mortgage.
The bottom line? Even if your monthly payment doesn't immediately change, rising interest rates can still affect your long-term mortgage costs.
What If You Have a Fixed-Rate Mortgage?
Good news for homeowners who are currently locked into a fixed-rate mortgage: your contracted interest rate and scheduled payment generally remain unchanged until your term ends, subject to your mortgage agreement.
However, if you're planning to purchase a home or renew your mortgage soon, there's another piece to consider.
Fixed mortgage rates are influenced by factors such as Government of Canada bond yields, lender funding costs, and market expectations. They don't simply move in lockstep with the Bank of Canada's overnight rate.
This means fixed mortgage rates can rise or fall before an official Bank of Canada announcement. If you're shopping for a home or approaching renewal, it's worth speaking with a mortgage professional sooner rather than later to understand the options available to you.
What Could Happen Next?
The Bank of Canada's next scheduled interest rate announcement is December 9, 2026.
Whether this increase is a one-time adjustment or the beginning of a longer period of rising rates will depend on several economic factors, including inflation, employment, economic growth, and overall financial conditions.
No one can predict interest rates with certainty. That's why it's important to make decisions based on your own financial situation rather than trying to guess what the market will do next.
Thinking About Buying or Selling a Home in Calgary?
Interest rates are one piece of the real estate puzzle, but they aren't the whole picture. Your budget, mortgage qualification, available homes, purchase price, and long-term plans all matter.
For buyers, understanding your financing before you start house hunting can help you shop with confidence. For homeowners nearing renewal, reviewing your options early may give you more time to prepare. And if you're considering selling, understanding how borrowing costs affect potential buyers can help you plan your next move.
Our advice? Don't make a major decision based on a headline alone. Get advice that reflects your circumstances, ask questions, and make sure you understand the numbers before moving forward.
At Russell Realty with CIR Realty, Carl and I believe that real estate is about people, not just properties. We're happy to help you understand what's happening in Calgary's housing market, explore your options, and connect you with trusted mortgage professionals who can answer your financing questions.
Have questions about buying, selling, or planning your next move? Sometimes, a conversation is the best place to start.
Mortgage rates and lending conditions can change. Speak with a qualified mortgage professional about your individual circumstances. This article is for general information only and is not financial advice.
