Bank of Canada Raises Rates to 2.5%: What It Means for Buyers, Sellers & Renters in Our Area

The Bank of Canada raised its key interest rate this morning by a quarter point, to 2.5%. It's the Bank's first increase since July 2023 and its first rate change of any kind in a year, after holding at 2.25% since last October. The reason is energy: higher oil prices tied to the war in the Middle East have kept headline inflation around 3% since April, and the Bank expects it to reach about 3.5% by year end. Core inflation is still close to the Bank's 2% target, but the Bank wants to stop high energy costs from spreading into everyday prices. Governor Tiff Macklem said more increases could be needed, but that the Bank will "proceed carefully" and decide one meeting at a time. The next announcement is December 9.

What it means for your mortgage. Variable-rate mortgages and home equity lines of credit are tied to the banks' prime rate, which usually moves in step with the Bank of Canada. If you're on a variable rate, expect your payment or interest cost to go up slightly. Fixed rates follow the bond market rather than today's decision, and had already been creeping higher on expectations of this move. If you're shopping for a home, a pre-approval with a rate hold is worth more right now than it was a month ago. If your mortgage renews in the next year, it's worth talking to your lender or broker early.

How our local markets looked in September (latest TRREB figures):

• Across the GTA: 5,040 sales, down 9% from last year, at an average price of $1,006,409 (down 5.1%). New listings fell 14.4%. TRREB described buyers as being in a "holding pattern" on economic uncertainty.
• Markham: 245 sales at an average of $1,125,353, selling at 98% of asking in about 34 days. The benchmark price is down 6% year-over-year.
• Stouffville: 41 sales at an average of $1,139,770, at 97% of asking in about 35 days. The benchmark price is down 6.3%.
• Uxbridge: 18 sales at an average of $1,391,022, at 94% of asking in about 44 days. The benchmark price is down about 11%, the steepest drop in our area.
• Toronto: 1,937 sales at an average of $1,034,320. Midtown districts held up better than the GTA overall, with benchmark prices down only about 1–2.5% in the areas covering Leaside, Mount Pleasant and Lawrence Park.

For renters and landlords. Ontario's 2027 rent increase guideline is 1.9%, down from 2.1% this year. It's the maximum increase for most rent-controlled units for increases taking effect in 2027, with 90 days' written notice required (Form N1). Units first occupied after November 15, 2018 are generally exempt. Rents are also easing in Toronto: the average unfurnished one-bedroom was $1,969 in October, down 3.7% from a year ago.

What this means for you. Sellers face more competition and more careful buyers, so pricing and presentation matter more than they did in the spring. Buyers have more choice and more room to negotiate than a year ago, but today's hike means it pays to lock in financing before you shop. TRREB's October numbers come out in early November, and we'll update you then.

Wondering what today's rate hike means for your home or your next move? Contact the Powell & Gallop Team.

This post is general information, not financial advice. Speak with your lender or mortgage broker about your own situation.

Sources: Bank of Canada · The Globe and Mail · The Canadian Press · TRREB Market Watch, September 2026 · Ontario rent increase guideline · liv.rent October 2026 Rent Report