10/28/2026
🏦 BANK OF CANADA RAISES INTEREST RATES!
What Does This Mean for YOUR Real Estate Plans? 🏡
📢 Today's big news: October 28, 2026
The Bank of Canada has raised its key interest rate by 0.25 percentage points, from 2.25% to 2.50%.
This is the first rate hike since 2023. Governor Tiff Macklem says higher energy prices could spread through the economy and make inflation more persistent. The Bank wants to reduce that risk and keep inflation moving towards its 2% target. It has also warned that another rate increase may be needed, depending on how the economy develops. But here's the important question for homeowners, buyers, sellers and real estate investors:
👉 Is this the beginning of a new interest-rate hiking cycle, and what could it mean for the Canadian real estate market?
Let's look at the facts—without unnecessary fear or false promises.
📌 1. WHY DID THE BANK OF CANADA RAISE RATES?
⛽ Higher energy prices: Rising oil and fuel costs can increase transportation, production and business expenses. If companies pass these costs on to consumers, inflation can spread beyond gasoline.
📈 Inflation risks: Canada's annual inflation rate reached 3.1% in September. The Bank is concerned that higher energy costs could keep inflation above its 2% target for longer than expected.
🌍 Global uncertainty: Conflict in the Middle East and trade tensions between Canada and the United States are creating uncertainty around prices, business investment and economic growth.
⚖️ The difficult balancing act: Raising rates can help control inflation, but it can also make borrowing more expensive and slow economic activity. In simple terms, the BOC is trying to prevent higher energy prices from turning into a widespread and lasting inflation problem. Governor Macklem's message is that the Bank is prepared to act if necessary, but uncertainty remains high. Economists have not all agreed on the best approach. Some have supported a rate increase to prevent inflation from becoming entrenched, while others have warned that weak underlying inflation and economic uncertainty call for caution.
📊 My takeaway: The Bank is prioritizing the risk of persistent inflation, even though higher rates may create additional challenges for borrowers and the economy.
🏡 2. WHAT COULD THIS MEAN FOR REAL ESTATE?
Let's separate the possible effects for different groups.
🔑 FOR HOME BUYERS
✅ A higher rate can make variable-rate borrowing more expensive and may reduce the mortgage amount some buyers qualify for.
✅ If some buyers become more cautious, there may be less competition for certain properties.
✅ Buyers who are financially prepared may find opportunities to negotiate, especially where sellers face limited demand.
⚠️ But don't assume that house prices will automatically fall. Property type, location, supply, employment and buyer demand all matter.
My question to buyers: Does this rate increase make you want to wait, negotiate harder, or move ahead if you find the right property?
🏠 FOR HOME SELLERS
A rate increase can influence buyer confidence and affordability. Some buyers may reconsider their budgets, while others may continue with their plans. If you're selling, this makes realistic pricing, presentation and a well-planned marketing strategy especially important.
✅ Understand recent comparable sales—not just asking prices.
✅ Price according to current competition and buyer demand.
✅ Consider your timing, financial needs and next move before making a decision.
⚠️ Don't panic and underprice your property simply because of today's announcement. Equally, don't assume yesterday's prices will automatically return.
My question to sellers: If you were planning to sell in the next 3–6 months, would today's announcement change your timing or your asking-price expectations?
💼 FOR REAL ESTATE INVESTORS
Investors need to examine the numbers more carefully than ever.
📉 Higher borrowing costs can reduce monthly cash flow and make highly leveraged properties less attractive.
🧮 Rental income, vacancy risk, property taxes, insurance, maintenance and future mortgage renewal costs all need to be considered.
📍 Some properties may offer better value when competition is weaker—but a lower purchase price alone does not make a good investment.
My question to investors: Would you buy an income property in today's market if the numbers worked, or would you wait for more clarity on interest rates and property prices?
💰 3. WHAT ABOUT EXISTING MORTGAGES?
This is where the details matter.
🔹 Variable-rate mortgage: A rate hike will generally put upward pressure on borrowing costs, although the effect on your payments depends on your mortgage terms.
🔹 Fixed-rate mortgage: Today's Bank of Canada decision does not automatically change the interest rate on an existing fixed-rate mortgage. Fixed mortgage rates are influenced by bond yields and other market factors.
🔹 Mortgage renewal coming up? Review your options early. Don't base your budget on the assumption that rates will soon fall.
📌 A 0.25-percentage-point increase may sound small, but its financial impact depends on the amount borrowed, the mortgage structure and the repayment terms.
💡 4. WILL HOUSE PRICES FALL NOW?
Here is my honest view: one rate decision is not enough to predict the direction of house prices.
Higher rates can reduce borrowing capacity and cool demand. However, prices also depend on housing supply, employment, population growth, household confidence, local market conditions and the number of homes being offered for sale. The GTA is not one uniform market. A condo, a detached house, a townhouse and an income property can respond differently to the same economic news.
The most useful question is not simply, “Will prices go up or down?” It is: What is happening in the specific neighbourhood and property segment you are considering?
🔮 5. WHAT HAPPENS NEXT?
I will be watching three important developments:
1️⃣ Inflation: Do higher energy prices spread into other goods and services, or does inflation begin to ease?
2️⃣ Economic growth and employment: Can the Canadian economy absorb higher borrowing costs without a significant deterioration in jobs and consumer confidence?
3️⃣ The Bank's next signals: Does Governor Macklem indicate that further increases are likely, or does the Bank become more comfortable holding rates steady?
The Bank has indicated that another increase could be necessary, but that is not a guarantee. Future decisions will depend on incoming economic data and the balance of risks.
🎯 MY INVITATION TO YOU
As someone who follows the real estate market closely, I believe informed conversations are more valuable than headlines that create fear or promise easy profits.
I would genuinely like to hear your perspective.
👇 JOIN THE DISCUSSION — WHICH ONE DESCRIBES YOU?
🏡 A — First-time buyer: I'm waiting for better affordability.
🔑 B — Move-up buyer: I'm concerned about mortgage costs and selling my current home.
🏠 C — Homeowner or seller: I'm wondering whether now is the right time to sell.
💼 D — Investor: I'm looking for opportunities but need the numbers to make sense.
📊 E — Market watcher: I'm waiting to see what happens with interest rates and prices.
Comment A, B, C, D or E below—and tell us WHY. Your experience may help another Canadian make a more informed decision.
💬 Have a question about mortgage affordability, selling strategy, property values or real estate investing? Ask it in the comments. Let's have a respectful, practical discussion.
📩 If you're planning to buy, sell or invest in the GTA and want to understand how current market conditions may affect your particular situation, feel free to reach out. Every property and every family's circumstances are different.
Dhar Dholakiya | Broker
RE/MAX Crossroads Realty Inc., Brokerage
📞 416-834-6208
I sell Real Estate; I bring Real Results.
Disclaimer: This post is for general information and discussion only. It is not mortgage, financial, legal or investment advice. Consult the appropriate professionals before making a financial or real estate decision.
