Policy Rate at 2.25%: What It Means in October 2026

Every Bank of Canada announcement gets a reaction from my clients, whether they are buying their first property or approaching their mortgage renewal. Here is where the policy rate stands as of October 2, 2026, when the next announcement will take place and what it means in concrete terms for your financing.

Where does the policy rate stand on October 2, 2026?

At its most recent decision, on September 2, 2026, the Bank of Canada held its policy rate at 2.25%. The Bank Rate remains at 2.50% and the deposit rate at 2.20% (Bank of Canada press release).

This rate has been stable for nearly a year: according to the table of decisions published by the Bank, it was lowered to 2.25% on October 29, 2025 and has not moved since, through the announcements of December 2025, then January, March, April, June, July and September 2026.

Why did the Bank pause?

In its September 2 press release, the Bank notes that economic activity in Canada strengthened in the second quarter and that consumer price inflation held at around 3%, mainly because of high energy prices. It adds that the upside risks to its inflation outlook have increased, and that the new U.S. tariffs could jeopardize the durability of the recovery. In short, a context of uncertainty that justifies caution.

Next announcement: October 28, 2026

The Bank of Canada sets its rate on eight pre-established dates a year. The next announcement is scheduled for October 28, 2026, at the same time as the publication of the Monetary Policy Report. The last announcement of the year will take place on December 9, 2026 (official schedule). No one can predict the decision in advance.

What it means for you: variable rate or fixed rate

The policy rate is not your mortgage rate, but it influences it. As the Bank of Canada explains, changes in the policy rate lead to similar movements in short-term rates, such as the prime rate of financial institutions. Long-term rates, which serve as the benchmark for fixed-rate loans, can also react, but they also depend on other factors, notably the movement of rates abroad.

• Variable rate: it can rise or fall during the term and is generally lower than a fixed rate for a similar term (Financial Consumer Agency of Canada). Because it is tied to short-term rates, it is the one that reacts most directly to Bank of Canada decisions.
• Fixed rate: it stays the same for the whole term, as do your payments, and it is usually higher than a variable rate for a similar term. It offers predictability, which many households look for in an uncertain environment.

The choice between the two depends on your risk tolerance, your budget and your plans (a possible sale before the end of the term, for example). It is a conversation to have with your financial institution or your mortgage broker.

The stress test: the current rule

To obtain a mortgage from a federally regulated institution, you must qualify at a rate higher than the one you negotiated. According to the Office of the Superintendent of Financial Institutions (OSFI), the minimum qualifying rate for uninsured loans is the higher of these two rates: 5.25% or the contract rate plus 2%. The Financial Consumer Agency of Canada specifies that this rule applies to both insured and uninsured loans.

In concrete terms, if you are offered a rate of 4%, your borrowing capacity will be assessed as if you were paying 6%. OSFI says it reviews this rate at least once a year.

And at renewal?

Good news for homeowners who want to shop around for their rate: since November 21, 2024, OSFI no longer requires the minimum qualifying rate to be applied to a straight switch of an uninsured loan to another federally regulated institution at renewal. Conditions: no increase in the loan amount or in the remaining amortization period (an increase of $3,000 is permitted to cover transaction costs, with no equity take-out) (OSFI). Lenders must still apply sound underwriting practices.

What should you do now?

1. Buyers: get a pre-approval to know your real budget, stress test included. You can start here: get a mortgage pre-approval.
2. Simulate your payments at different rates with the mortgage calculator, allowing a margin in case rates move.
3. Homeowners renewing: compare offers several months before maturity; a straight switch can now be done without going through the stress test again, under certain conditions.

Financing is only one part of the equation: the choice of neighbourhood, the right price and the right timing matter just as much. If you want to take stock of your purchase or sale plans on the South Shore, in Montréal or in the Eastern Townships, I would be happy to discuss them with you, no obligation: contact me.

Frequently asked questions

What is the Bank of Canada's policy rate in October 2026?

As of October 2, 2026, the policy rate is 2.25%. It was held at that level at the September 2, 2026 decision and has not changed since October 29, 2025.

When is the next Bank of Canada announcement?

The next announcement is scheduled for October 28, 2026, with the publication of the Monetary Policy Report. The following one will be on December 9, 2026.

Do I have to go through the stress test again if I switch lenders at renewal?

For an uninsured loan transferred directly to another federally regulated institution, with no increase in the amount or the amortization, OSFI has no longer required the minimum qualifying rate since November 21, 2024. The lender must still assess your file using sound practices.