The Bank of Canada raised its policy interest rate by 0.25 percentage points to 2.5% on October 28, citing the risk that persistently high energy costs spread more broadly through the economy. The Bank Rate is now 2.75%, and the deposit rate is 2.45%.

For Ottawa households reviewing borrowing costs, the policy rate is not the mortgage rate a lender charges. The Financial Consumer Agency of Canada says lenders set mortgage rates using factors including their prime rate, the mortgage type and the borrower’s credit history.

Fixed mortgage rates stay unchanged during the agreed term. With a variable-rate mortgage, higher interest rates can increase payments or shift more of a fixed payment toward interest, depending on the contract. Borrowers can check their agreement and ask their lender how any rate change applies.

The Bank’s next scheduled rate decision is December 9. It says further increases could be needed, while emphasizing uncertainty.

Official sources: Bank of Canada decision, October 28; FCAC mortgage-interest guidance.