October 2026: Will the Bank of Canada hike rates?

Markets are no longer treating an October hold as a sure thing. Ahead of the Bank of Canada's Oct. 28, 2026 interest-rate announcement and Monetary Policy Report, traders and several major banks have swung toward expecting a quarter-point hike — a move that would matter immediately for variable-rate borrowers and for anyone trying to qualify for a mortgage in Greater Vancouver.

What's changed

The overnight rate has sat at 2.25% since a cut in October 2025, and the Bank has not raised rates since July 2023. That long pause is why many still expected an eighth consecutive hold. The shift this week came from sticky energy-driven inflation risk and a more cautious tone from the Bank itself.

Governor Tiff Macklem recently warned that borrowing costs may need to rise if energy prices stay elevated, pointing to continued Middle East conflict with "no resolution in sight." Fresh Statistics Canada inflation data put rising fuel costs back in the spotlight, while the Bank's latest business survey found firms bracing for higher prices even if energy pressures have not fully spilled into the broader economy yet.

According to CBC News reporting, overnight-swap markets now put the odds of a 25-basis-point hike at about 87%, up from roughly 70% earlier in the week. The Bank of Montreal, RBC Dominion Securities, and Desjardins Group have flipped their Oct. 28 calls from hold to hike. Scotiabank's Derek Holt said the call "isn't a slam dunk," but there is "probably enough supporting evidence." Macquarie's David Doyle keeps a hike this month as the baseline and sees a steady hiking cycle ahead; mortgage commentator Leah Zlatkin also expects that if a hike comes, it may not be a one-and-done move.

Why this hits housing hard

Canada's housing market is already soft. National sales volumes are near a 25-year low, and confidence is weak amid trade uncertainty and other economic worries. A hike would raise variable-rate payments right away. Fixed rates for new mortgages can also firm up if bond markets price in more tightening. Fewer buyers would qualify under the stress test, which tends to shift negotiating power toward those who can still finance a purchase — and can put further downward pressure on prices.

Insolvency expert Scott Terrio put it bluntly in the CBC piece: the housing market is "on its knees," and rising rates would be "like tossing a drowning guy an anchor." Edge Realty Analytics' Ben Rabidoux notes per-capita sales already look recessionary by historical standards and says a gradual price decline over the next three to six months is "very plausible" if rates start rising. CREA recently cut its 2026 sales forecast again, citing a more hawkish Bank of Canada tone and projecting 444,530 national sales by year-end — about 5.2% below 2025.

What it means for Coquitlam and Metro Vancouver

Locally, Greater Vancouver has already been a buyer's-leaning market into fall 2026, with sales well below long-run averages and benchmark prices lower year over year. Another turn higher in rates would mainly affect three groups:

• Variable-rate homeowners, who would feel the payment increase first

• Buyers on the edge of qualification, who may need a smaller purchase price, a larger down payment, or more income to pass the stress test

• Sellers who are still priced for last year's market, who may need sharper pricing or more flexibility on subjects and timelines

None of that means "never buy" or "never sell." It means the cost of money is back in the driver's seat. If you already qualify comfortably, a softer asking-price environment can still create opportunity. If your payment or qualification is tight, waiting for the Oct. 28 decision — and reading the Bank's Monetary Policy Report language carefully — is sensible before locking a rate or writing a firm offer.

What to watch on Oct. 28

The decision itself is only half the story. Watch whether the Bank hiked or held, how it describes energy and inflation risks, and whether it signals one move or a path of further increases. That guidance will shape fixed-mortgage pricing and buyer psychology into the rest of fall.

Are you curious about recent market activity or thinking of buying or selling in Coquitlam or Greater Vancouver? Contact us today for a comprehensive market analysis!

— Sam Tabrizi

Sources

CBC News (Jeff Lagerquist, posted Oct. 21, 2026): https://www.cbc.ca/news/business/real-estate-bank-of-canada-9.7389322

Bank of Canada — Interest Rate Announcement and Monetary Policy Report, Oct. 28, 2026: https://www.bankofcanada.ca/2026/10/interest-rate-announcement-and-monetary-policy-report-october-28-2026/

BoC key interest rate page: https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/