{"id":949944,"date":"2026-10-28T23:30:11","date_gmt":"2026-10-28T23:30:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/949944\/"},"modified":"2026-10-28T23:30:11","modified_gmt":"2026-10-28T23:30:11","slug":"what-the-bank-of-canadas-rate-hike-means-for-your-money","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/949944\/","title":{"rendered":"What the Bank of Canada’s rate hike means for your money"},"content":{"rendered":"

The Bank of Canada raised its benchmark interest rate for the first time in more than three years on Wednesday.<\/p>\n

A quarter-point rate hike now brings the central bank\u2019s policy rate to 2.5 per cent.<\/p>\n

That key rate, which influences the cost of borrowing for banks, businesses and consumers alike, will effectively increase borrowing costs for consumers while rewarding savers.<\/p>\n

Here is how the rate move can affect different aspects of your finances:<\/p>\n

Mortgage<\/p>\n

Variable mortgage rates will go up after Wednesday\u2019s announcement.<\/p>\n

Ryan Gubic, personal certified financial officer and founder of MRG Wealth, said homeowners with variable mortgages will start receiving notices in the next 24 to 48 hours that their rates are going to increase.<\/p>\n

For many who have a variable rate but fixed payment, it means more of their monthly mortgage payment will be going to interest rather than the principal. <\/p>\n

Homeowners with fixed-rate mortgages will not see an immediate increase in their interest rate, but it\u2019s still important to keep track of rate changes.<\/p>\n

\u201cFor Canadians (who are ) going to be renewing in the next year or two, if interest rates are changing along the way, it\u2019s important to understand what the new renewal rate would look like for them and their payments,\u201d Gubic said.<\/p>\n

Potential homebuyers, meanwhile, will need to revisit their finances to see if higher rates fit their budget, said Kelly Ho, a Vancouver-based certified financial planner.<\/p>\n

\u201cIf there\u2019s no room to absorb another increase, then they may want to consider redoing their math to see what they can actually afford,\u201d she said.<\/p>\n

Lines of credit<\/p>\n

Interest rates on personal lines of credit and home equity lines of credit typically move in tandem with the central bank.<\/p>\n

\u201cWhen the Bank of Canada moves its prime rate, lenders usually adjust their prime rates as well, and that flows straight through to variable-rate loans and lines of credit,\u201d said Natasha Macmillan, senior director of everyday banking at Ratehub.ca.<\/p>\n

She recommended finding out the rate you\u2019re paying on the outstanding balance and keeping up with payments.<\/p>\n

Auto loans with variable rates may also be affected, but Macmillan said car loans typically have fixed rates.<\/p>\n

HELOCs or home equity lines of credit also carry variable interest plus a spread that a bank or the financial institution charges, Gubic said.<\/p>\n

Savings<\/p>\n

Savers tend to emerge as winners when interest rates go up since they can earn a tad more in high-interest savings accounts and investments like GICs. <\/p>\n

Many banks are, however, slow in raising interest rates on savings accounts after a central bank rate hike, and it can take up to two weeks for new rates to be reflected, Macmillan said. <\/p>\n

She suggested comparing rates across institutions to make sure you\u2019re making every little bit of income where you can on your savings and that you are earning a competitive return.<\/p>\n

Stock markets<\/p>\n

A higher central bank rate can put downward pressure on stock valuations. <\/p>\n

\u201cWhen businesses have higher borrowing costs, that might decrease profitability,\u201d Gubic said. \u201cThat can impact results in their stock performance.\u201d<\/p>\n

Investors also discount future earnings potential because of a higher rate, which eventually weighs on a company\u2019s stock price. <\/p>\n

But stock markets often price in expectations for certain economic factors, such as interest rate moves, ahead of time. That means markets may not be as volatile after a single rate decision, Gubic said.<\/p>\n

What to do next?<\/p>\n

Gubic said consumers should review all their debt \u2014 mortgages, lines of credit, car loans \u2014 when interest rates change and check for any with variable rates to see how their payments could change.<\/p>\n

Those with fixed-term loans should check when the next rate renewal is and plan ahead, he said. <\/p>\n

Savers should also determine if they\u2019re getting a reasonable rate on their savings or if they could switch to an account that has a higher return. <\/p>\n

Lastly, Gubic said investors should revisit their investment portfolio to see if it meets their long-term goals and risks.<\/p>\n

He said a well-diversified investment portfolio should be able to withstand changes to interest rates, inflation and economic conditions.<\/p>\n

\u201cFor long-term investors, the biggest mistake is making portfolio changes based on a single interest rate announcement,\u201d he said.<\/p>\n

\u201cDon\u2019t make knee-jerk reactions. Have a strategy, have a plan, and review everything holistically.\u201d<\/p>\n

\t\tKeep it Factual<\/p>\n

Add CityNews Vancouver as a trusted source on Google to see more local stories from us.<\/p>\n

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