Bank of Canada October 28, 2026: Fixed-Payment Variable Mortgages and Trigger Rates

The Bank of Canada makes its next rate announcement on Wednesday, October 28, 2026, at 9:45 a.m. As this is written, the outcome is unknown, and economists are split between a hold and a 25-basis-point hike. Our article on the September decision and the upward tilt in inflation risk covers the central bank's backdrop. This one answers a narrower, more practical question: if you have a variable-rate mortgage with fixed payments, what does each of the three possible outcomes do to your loan, month by month?

Before October 28: what we know and what we don't

The policy rate sits at 2.25%. It has been unchanged since the October 29, 2025 cut. The big banks' prime rate, which most variable mortgages are priced against, is 4.45%. A Bank of Canada decision usually flows through to prime, and from there to your variable rate.

What we don't know is the decision itself, and this article does not forecast it. Instead, it sets you up to read it: whatever happens on Wednesday, you will know exactly what it does to your payment, your principal and your amortization.

Fixed payments vs adjustable payments: two different variable mortgages

"Variable" covers two products that react in opposite ways to a rate change.

• Adjustable-payment variable mortgage: the payment follows the rate. A hike raises your payment at the next adjustment, a cut lowers it. Your amortization stays roughly the same.
• Fixed-payment variable mortgage: the payment stays put. What moves is the split between interest and principal. When rates rise, more of the same payment goes to interest, less principal gets paid down, and amortization stretches. When rates fall, the reverse happens.

With fixed payments, a rate change does not show up in your monthly bank withdrawal. It shows up on your mortgage statement: in the principal line, and in the date your loan will finally be paid off.

The illustrative example: $400,000 over 25 years

To make the mechanics visible, here is an illustrative example, not a real file. The assumptions: a $400,000 loan, a 25-year amortization, a variable rate equal to the 4.45% prime minus a 1.00-point discount, so 3.45%, monthly payments and interest calculated monthly.

Under those assumptions, the fixed monthly payment is $1,991.78. In month one, $1,150.00 of that payment covers interest and $841.78 pays down principal. That split is what moves depending on the Bank of Canada's call.

Three scenarios for October 28: what changes in month one

The table below runs the same loan through the three possible outcomes: a hold, a 25-basis-point cut and a 25-basis-point hike. It assumes prime follows the decision and the 1.00-point discount stays the same. The fixed payment remains $1,991.78 in all three cases.

Three takeaways. A 25-basis-point cut sends about $83 more a month to principal and shortens your effective amortization by a year. A 25-basis-point hike takes about $83 a month away from principal and adds 14 months. And the last column shows what an adjustable-payment borrower would pay to keep a 25-year schedule: that is the gap a fixed-payment loan absorbs quietly.

Note the asymmetry: the hike adds 14 months while the cut removes only 12. The higher rates go, the more each additional hike weighs on the life of the loan.

The trigger rate: when your payment covers only interest

The trigger rate is the interest rate at which your fixed payment pays interest only. At that rate, no principal gets paid down. The formula is simple: monthly payment times 12, divided by your outstanding balance.

In the example, that is $1,991.78 times 12, divided by $400,000, which gives 5.98%. That is 253 basis points above today's 3.45% rate, or roughly ten 25-basis-point hikes. A single decision, whichever way it goes, only moves you a fraction of the way.

Your trigger rate is not fixed: it rises as your balance falls. After five years at a constant rate, the example's balance drops to $344,961.15, and the same payment then puts the trigger rate at 6.93%. To find yours, plug in the balance and payment from your latest statement.

The contractual trigger point: the clause to reread

Don't confuse the calculated trigger rate with the contractual trigger point. The trigger point is a limit written into some mortgage contracts: past it, the lender requires a higher payment, a lump sum or another step. Whether it exists, where it sits and what it triggers all depend on your contract and your lender.

This article deliberately gives no number for that limit, because there is no general one. The only reliable source is your mortgage agreement, or your lender. If the clause is unclear, your mortgage advisor or notary can go through it with you.

What to prepare before Wednesday

• Check your contract to see whether your variable mortgage has fixed or adjustable payments.
• Note your balance, payment and current rate, then calculate your trigger rate with the formula above.
• Look for a contractual trigger point in your agreement, and what it requires.
• Be ready to read all three outcomes: a cut shortens your amortization, a hike lengthens it, a hold leaves the split unchanged.

These figures describe an illustrative example and are not personal advice. For your own mortgage, talk to your lender or mortgage advisor. And if you are shopping for a home, a broker can help you build these scenarios into your purchase budget.