When the Bank of Canada changes its policy rate, lenders usually move their prime rates soon after, and that flows through to variable-rate mortgages. After the October 28, 2026 increase to 2.5%, lenders such as RBC raised prime from 4.45% to 4.70%, effective October 29. Here is a short checklist of what to look at on your own mortgage.
1. Confirm which kind of variable mortgage you have
The Financial Consumer Agency of Canada (FCAC) describes two main types:
- Adjustable payments: "the amount of your payment changes if the interest rate changes." A set amount still goes to principal.
- Fixed payments: the payment stays the same, but when rates rise a larger share goes to interest and less to principal.
Your mortgage contract or annual statement will say which one you have. HELOCs and other lines of credit tied to prime usually reprice as well.
2. Read your lender's notice
Check the new rate, the date it takes effect and, for adjustable payments, the new payment amount. Each lender sets its own prime rate and timing, so do not assume a number from a headline applies to you.
Hypothetical example. A $400,000 balance with 25 years of amortization remaining moves from 4.20% to 4.45% (prime minus 0.25%, before and after a 0.25-point prime increase). Assuming interest compounded semi-annually and monthly payments, the payment rises from about $2,147.67 to about $2,202.79, an increase of about $55 a month. If the payment were fixed instead, the principal paid in the first month would fall from about $760 to about $678 as the interest portion rises. Your contract's compounding and terms may differ.
3. Find your trigger rate, if you have fixed payments
FCAC says that if rates rise to a certain level, "your lender may increase your payments," and "the trigger point is listed in your mortgage contract." It also warns that if none of your payment goes to principal, "the total amount you owe on your mortgage will increase." Compare your current rate with your trigger rate, and ask your lender what happens if it is reached.
4. Look at your amortization
With fixed payments, rising rates can stretch the time it takes to pay off the mortgage. Your statement should show the remaining amortization. If it has grown, ask your lender what options exist to bring it back, such as a higher regular payment or a lump-sum prepayment within your privileges.
5. Check your options: stay, convert or prepay
- Stay variable: a reasonable choice if the payment fits comfortably and you can absorb further increases. The Bank said there "could be a need to increase the policy rate further," but did not commit to it.
- Convert to fixed: FCAC notes that some contracts allow switching to a fixed rate, which may involve a fee or conditions and a fixed rate that may be higher than your variable rate. Ask what rate and term are offered.
- Prepay: extra payments reduce the balance that interest is charged on. Check your annual prepayment limits first.
Our interpretation: no option is right for everyone. The useful question is whether the payment still fits your budget if rates rise again, and whether you would rather pay for certainty with a fixed rate.
6. Act early if payments are tight
FCAC advises that "acting early is important to prevent the situation from getting worse." If a higher payment strains your budget, contact your lender before you miss a payment.
Next steps
Use the mortgage payment calculator to test your payment at a higher rate and the fixed vs variable calculator to compare a conversion. To compare offers from several lenders at renewal, a mortgage broker can help.
Sources
- Financial Consumer Agency of Canada, Interest on mortgages, 2024-02-23. Accessed 2026-10-29.
- Bank of Canada, Bank of Canada raises the policy rate by 25 basis points to 2½%, 2026-10-28. Accessed 2026-10-29.
- RBC Royal Bank (via Cision), RBC Royal Bank announces change to prime rate, 2026-10-28. Accessed 2026-10-29.
General information only, not financial advice. The example is hypothetical. Mortgage terms, prime rates and conversion options vary by lender; check your own contract.
