Royal Bank kicked off the increases. The 50 basis-point increase by Canada's largest bank by market cap mirrors the Bank of Canada's hike, taking RBC's prime rate from 2.70 to 3.20 per cent.
Canada's central bank raised its key rate to 1 per cent to fight surging inflation, which at 5.7 per cent is at the highest level since 1991.
“Inflation is too high. It is higher than we expected and it’s going to be elevated for longer than we previously thought,” said Bank of Canada Governor Tiff Macklem during a news conference.
“We need higher interest rates.”
Variable mortgage rates going up
Increases to the overnight rate trickle down to variable-rate mortgages but won't directly affect fixed-rate mortgages.
LowestRates.ca used its mortgage calculator to crunch the numbers.
It says for an average priced Canadian home of $860,000 (with 15 per cent down amortized over 25 years), monthly mortgage payments based on a typical best five-year variable rate today of two per cent would be about $3,197.
The same mortgage with a 50 basis point rate rise means the estimated payment rises to $3,383, an increase of $186 per month or $2,232 per year.
"Some variable rate holders may think about switching to a fixed rate to bring some stability to their outlook, but anyone with variable rate will still be saving money over a fixed rate right now," said Leah Zlatkin, licensed mortgage broker.
"Your best approach is to budget for more increases and talk to your broker about your options.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.