A rate hike is on the table. Here is what the last rate cycle did to insolvency filings.

The Bank of Canada announces its next interest rate decision on Wednesday, Oct. 28, at 9:45 a.m. ET, and the question has changed. For most of this year the discussion was about when rates might fall. Now it is whether the Bank raises its policy rate, currently 2.25%, for the first time since 2023. In a Reuters poll of 34 economists taken Oct. 21 to 23, 19 expected a quarter-point increase to 2.50%.¹ Others do not: RBC’s economists were reported as still expecting the Bank to hold for the rest of 2026.²

Nobody can say which view is right, and this is not a forecast. What the data can offer is perspective: how consumer insolvencies behaved the last time rates moved through a full cycle.

What the Bank has said

At its Sept. 2 decision, the Bank held at 2.25% and said it was “prepared to adjust monetary policy as needed.”³ It pointed to high energy prices and to the risk that they spill into other prices. Statistics Canada has since reported that consumer prices rose 3.1% in September from a year earlier, with gasoline up 27.8%.⁴ Excluding gasoline, inflation was 2.2%.

The last rate cycle, in numbers

The Bank made its first increase of the cycle on March 2, 2022, to 0.5%.⁵ It reached 5% on July 12, 2023,⁶ made its first cut on June 5, 2024,⁷ and has held at 2.25% since its Oct. 29, 2025 cut.⁸ Here is what happened to consumer insolvencies, meaning consumer bankruptcies plus consumer proposals, in the calendar years around it:

Source: Office of the Superintendent of Bankruptcy (OSB) open data; the sums and percentage changes are our own calculations.⁹

For comparison, 2009 recorded 151,712 consumer insolvencies, the highest year on record. In the 12 months to August 2026, the OSB counted 146,135, which is 3.7% below the 2009 total.¹⁰ That window is not a calendar year, so treat the comparison as approximate.

What the history does and doesn’t show

Three things stand out.

Filings rose in every year of the cycle. The biggest one-year jump came in 2023, the year the rate reached 5%.

They kept rising after the Bank started cutting. Filings grew in both 2024 and 2025, though more slowly, so lower rates did not turn the trend around quickly. One reason may be timing: a fixed-rate mortgage only reprices at renewal, so a rate move reaches some household budgets years later.¹¹

The mix changed. Consumer proposals made up about 78% of 2025’s consumer insolvencies, against about 23% in 2009. Our look at filings over 13 years goes into that shift.

What the annual figures cannot do is separate rates from everything else. Prices and jobs were also moving; Canada lost 68,000 jobs in September, as we reported in an earlier story. It would be a mistake to read the table as proof that rate decisions alone drive filings. You can follow the latest monthly numbers in our Canadian insolvency statistics tracker.

Why a decision matters to household debt

A higher rate raises borrowing costs on variable-rate debt such as lines of credit and variable-rate mortgages, and affects fixed-rate mortgages when they renew, according to the Financial Consumer Agency of Canada (FCAC).¹¹ A hold changes nothing immediately. Neither outcome is a verdict on any one household. What matters is how your own debts are set up.

What this means for you

• List which debts reprice, and when. Variable-rate loans and lines of credit respond to rate changes; fixed-rate mortgages do so at renewal.
• Ask your lender about your trigger rate if you have a variable mortgage with fixed payments. The FCAC explains that it is the rate at which your payment covers only interest.¹¹
• Plan for today’s rates, not hoped-for ones. If your budget only works if rates fall, it is worth building a second plan.
• If payments are already a struggle, get advice early. Only a Licensed Insolvency Trustee can administer a consumer proposal or a bankruptcy, and the OSB says trustees typically do not charge for an initial meeting.¹² A plain-language overview of Canada’s debt relief services sets out the main options side by side. Each has trade-offs, including its effect on your credit report. Our consumer proposal guide covers what a proposal involves.