The Bank of Canada made a major move on October 28, raising its policy rate from 2.25% to 2.50%. This was the first rate increase since July 2023, and it immediately changes the conversation for buyers who had been waiting for borrowing costs to fall.
The reason is inflation. The Bank says inflation has been running around 3% and could rise to roughly 3.5% by the end of 2026, driven partly by higher energy costs and broader price pressure. The Bank also warned that another increase may be needed if inflation stays too high.
For GTA buyers, this means waiting for dramatically cheaper financing may not work out the way many expected. Variable mortgage rates are more directly affected by Bank of Canada decisions, while fixed rates depend more on bond markets. Either way, higher-for-longer borrowing costs can reduce how much buyers qualify for.
For sellers, the impact is mixed. Higher rates can make buyers more cautious, but the market may also see fewer homeowners rushing to list. That means good properties with limited competition can still attract serious buyers, especially if they are priced realistically.
The simple takeaway is this: buyers should stop assuming lower rates are guaranteed. The better question is whether the right home is affordable at today’s payment. Sellers, meanwhile, should expect buyers to remain highly sensitive to price and monthly carrying costs.
Source: Bank of Canada, October 28, 2026.