The Bank of Canada has held its policy rate at 2.25% since October 2025, and its next decision is on October 28. Here is where the numbers stand for luxury and pre-construction buyers, and which rates are already fixed whatever the Bank decides.
This is for buyers at the upper end of the Toronto market and for anyone holding or considering a pre-construction purchase. The Bank of Canada announces its next rate decision on October 28. I am not going to guess the outcome. What I can do is set out where the numbers stand today and which rates in a pre-construction agreement are already fixed, whatever the Bank decides.
The short answer: the policy rate has been 2.25% following the cut announced on October 29, 2025, and the Bank held it again on September 2, 2026. Since then, inflation has run at 3.1%, bond yields have risen, and the five-year posted mortgage rate has moved up while the policy rate has not. For pre-construction buyers, the interest rates on refunds and on interim occupancy for this period are already set.
What did the Bank of Canada decide on September 2?
On September 2, 2026, the Bank held the target for the overnight rate at 2.25%, the Bank Rate at 2.5% and the deposit rate at 2.20%. According to the Bank's decision history, the rate has been 2.25% at every announcement since the 0.25-point cut on October 29, 2025.
The press release was not a statement of comfort. The Bank pointed to continuing conflict in the Middle East keeping energy prices high, and to new US tariffs and Canadian counter-measures following the breakdown of Canada-US trade talks. It noted that financial conditions had tightened since July and that long-term bond yields had moved up globally, including in Canada. It also reported that GDP rose 3.3% in the second quarter after a very weak first quarter, that there had been some rebound in housing activity, and that unemployment edged down to 6.4% in July.
Two phrases matter most. The Bank said that "upside risks to the Bank's inflation forecast have increased," and that Governing Council "is prepared to adjust monetary policy as needed." I read that as a Bank keeping its options open in both directions, not one signalling a path.
What has inflation done since?
Statistics Canada reported on October 19 that the Consumer Price Index rose 3.1% year over year in September, after 3.0% in August. Gasoline was up 27.8%. Excluding gasoline, prices rose 2.2%, down from 2.4% in August. In Ontario, CPI rose 2.5%.
Within shelter, which rose 1.8%, the mortgage interest cost index fell 0.2% and rent rose 2.8%. The headline number is being driven largely by energy. I will assess the Bank's explanation after its October 28 announcement. The next CPI release, covering October, is on Monday, November 16.
Why have fixed mortgage rates moved while the policy rate has not?
Fixed mortgage rates follow bond yields more closely than the overnight rate. According to Bank of Canada data, the five-year Government of Canada bond yield was 3.35% on September 1, rose to 3.69% on September 29, and stood at 3.50% on October 22. The ten-year yield was 3.75% on September 1 and 3.78% on October 22.
The chartered bank five-year posted conventional mortgage rate was 6.09% each week through September 30 and 6.19% on October 7, 14 and 21. The one-year posted rate held at 5.49% every week from September 2 through October 21. These are posted rates, not the discounted rates borrowers typically negotiate, but the direction is the point. Over the same period, the policy rate did not move.
I discussed this pattern in Rate Hold, Rising Fixed: What the Bond Market Is Signaling. Bond markets price expectations, so yields can move before, after or regardless of a decision. I would not treat the October 28 announcement as the only event that matters for a fixed-rate quote.
How does the stress test apply to luxury buyers?
For an uninsured mortgage from a federally regulated lender, the OSFI minimum qualifying rate applies. You must qualify at the greater of your mortgage contract rate plus 2% or 5.25%. In practice, any contract rate at or below 3.25% (5.25% minus 2 percentage points) qualifies at the 5.25% floor, and any rate above that qualifies at the contract rate plus two points. OSFI reviews the rate at least annually.
Two practical points. First, the qualifying rate is tied to your contract rate, so a higher fixed-rate quote can raise the rate you must qualify at once the buffer exceeds the floor. Second, OSFI does not expect lenders to apply the qualifying rate to an uninsured straight switch at renewal, meaning a move between federally regulated lenders with no increase to the amortization or loan amount. That can matter for owners with a renewal coming up who are weighing whether to move lenders. My fuller explanation is in Mortgage Stress Test Canada: How It Works in 2026.
On variable versus fixed, I do not give a blanket answer. A variable rate follows the policy rate, which has been unchanged for nearly a year but which the Bank says it is prepared to adjust. A fixed rate follows bond yields, which have already moved. The right choice depends on your cash flow, your holding period and how much rate movement you can absorb, and it is a conversation to have with your lender and adviser.
Which pre-construction rates are already fixed?
Several rates that matter to pre-construction buyers are set by regulation from published data, on a schedule. They will not change because of the October 28 decision.
Interest on a refunded condo deposit
If a condominium agreement is terminated and the builder must refund your money under section 82(7) of the Condominium Act, interest is paid at a prescribed rate under Ontario Regulation 48/01. The rate resets on April 1 and October 1, and it depends on the age of the project.
- Newer projects, where no agreement in the corporation or phase was signed before the 2022 amendment (O. Reg. 504/22) took effect and your agreement was signed on or after that day: under section 19.1, the rate is the policy rate at the end of September 30. For October 1, 2026 to March 31, 2027, that is 2.25%.
- Older projects: under section 19(3), the rate is 2 percentage points below the Bank Rate at the end of September 30. With the Bank Rate at 2.5%, that is 0.50% for the same period.
Ask your lawyer which regime your project falls under. I cover the cancellation rules in Pre-Construction Deposit Protection in Ontario Explained.
Interest in the interim occupancy fee
Under section 19(1) of the same regulation, the interest component of the interim occupancy fee uses the chartered bank one-year conventional mortgage rate most recently reported by the Bank of Canada as of the first of the month in which the purchaser assumes interim occupancy or is required to do so under the agreement. For occupancy beginning or required in October 2026, that rate is 5.49%. The reference rate is determined for each occupancy-start month from the posted one-year rate. It does not reset monthly for the same purchaser. I explain the full fee in Interim Occupancy Fees in Ontario: How They're Calculated.
Where the numbers stand on October 23, 2026
| Measure | Level | Source |
|---|---|---|
| Target for the overnight rate | 2.25% (held September 2, 2026, and 2.25% on October 22) | Bank of Canada |
| Bank Rate / deposit rate | 2.5% / 2.20% | Bank of Canada |
| CPI, September, year over year | 3.1% (2.2% excluding gasoline) | Statistics Canada |
| Ontario CPI, September, year over year | 2.5% | Statistics Canada |
| 5-year Government of Canada bond yield | 3.35% (Sept 1), 3.69% (Sept 29), 3.50% (Oct 22) | Bank of Canada |
| 10-year Government of Canada bond yield | 3.75% (Sept 1), 3.78% (Oct 22) | Bank of Canada |
| 5-year posted conventional mortgage rate | 6.09% through Sept 30, 6.19% from Oct 7 | Bank of Canada |
| 1-year posted conventional mortgage rate | 5.49% | Bank of Canada |
| Minimum qualifying rate, uninsured | Greater of contract rate + 2% or 5.25% | OSFI |
| Condo refund interest, Oct 1, 2026 to Mar 31, 2027 | 2.25% (s. 19.1) / 0.50% (s. 19(3)) | O. Reg. 48/01 |
| Interim occupancy interest, occupancy beginning or required in October 2026 | 5.49% | O. Reg. 48/01, s. 19(1) |
| Next rate announcement and Monetary Policy Report | October 28, 2026 (then December 9, 2026) | Bank of Canada |
What this means for you
- Luxury buyer with financing: qualify at today's quote, not the rate you hope for after October 28. If you hold a rate commitment, confirm its expiry date with your lender.
- Pre-construction buyer approaching occupancy: the 5.49% interim occupancy rate applies to occupancy beginning or required in October 2026. Budget for the monthly fee at that rate and check which month your occupancy is set to begin.
- Pre-construction buyer worried about cancellation: know whether your project falls under the 2.25% or the 0.50% refund rate for this period. The difference is material on a large deposit.
- Owner facing renewal: OSFI does not expect the qualifying rate to apply to an uninsured switch between federally regulated lenders at renewal with no increase to amortization or loan amount, which can widen your options.
As the Bank notes, a change to the policy rate takes effect the day after its announcement, so any change on October 28 would apply from October 29. It would not change the regulatory rates above for their current periods. I will update this note after the October 28 announcement.
This is general information, not financial or legal advice. Speak with your lender, your own real estate lawyer and your financial adviser about your circumstances.
Frequently asked questions
When is the next Bank of Canada decision?
October 28, 2026, together with the Monetary Policy Report. The decision after that is scheduled for December 9, 2026.
Why did my fixed-rate quote rise when the Bank did not move?
Fixed rates track bond yields. The five-year Government of Canada yield rose from 3.35% on September 1 to 3.50% on October 22, and the five-year posted conventional rate moved from 6.09% to 6.19% in October. The policy rate was 2.25% throughout.
Will the October 28 decision change my condo deposit refund rate?
Not for the current period. The refund rate for October 1, 2026 to March 31, 2027 was fixed using the rates at the end of September 30: 2.25% for newer projects and 0.50% for older ones. The next reset is April 1, 2027.
Sources
- Bank of Canada maintains the policy rate at 2¼%, September 2, 2026 (Bank of Canada)
- Policy interest rate (Bank of Canada)
- Target for the overnight rate, series V39079 (Bank of Canada)
- 5-year and 10-year Government of Canada benchmark bond yields (Bank of Canada)
- Chartered bank posted conventional mortgage rate, 1-year, series V80691333 (Bank of Canada)
- Chartered bank posted conventional mortgage rate, 5-year, series V80691335 (Bank of Canada)
- Consumer Price Index, September 2026 (Statistics Canada, The Daily)
- Consumer Price Index by province, September 2026, Table 2 (Statistics Canada)
- Minimum qualifying rate for uninsured mortgages (OSFI)
- O. Reg. 48/01, ss. 19 and 19.1, under the Condominium Act, 1998 (Government of Ontario, e-Laws)