The Bank of Canada holding its overnight rate at 2.25% on Wednesday means variable mortgages rates will hold steady, as fixed mortgage rates rise. “The rate hold means stability for anyone currently in a variable-rate mortgage and neither the size of the mortgage payment, or the portion going towards interest, will change for these borrowers.” says Penelope Graham of Ratehub.ca. “This latest rate hold also follows a cumulative nine rate cuts from the bank, meaning the variable mortgage rates available today are still the lowest they’ve been since the spring of 2022. Currently, borrowers can still get a five-year variable term as low as 3.45%.” “However, there’s always the possibility that lenders will decrease the spread between this pricing and their prime rates. It’s still a good idea to take out a rate hold or pre-approval to guarantee access to this pricing.” Fixed mortgage rates are not influenced by the bank’s rate, but by bond yields, says Graham. “Fixed mortgage rates have been steadily rising in recent weeks alongside bond yields. The latest crop of strong economic data, such as surprising robust GDP and labour numbers, have pushed the five-year Government of Canada bond yield above 3%, its highest since August,” she says. “Yields are likely to rise further following the bank’s rate hold and will continue to put upward pressure on fixed mortgage rates.” .Analysts are of mixed opinions if and when the bank will make its next move. Ron Butler, of Butler Mortgages, expects the bank to keep its policy rate on hold in January and March before beginning to cut later next year. “The reason is the continued deterioration of the Canadian economy,” he told Canadian Mortgage Trends. The chance of a rate hike in 2026 is slim, says Doug Porter, chief economist at BMO, telling Canadian Mortgage Professional, the bank, if it makes a move, would be more likely to cut the rate next year, but a rate hold is more likely. Porter says the bank’s decision will weigh heavily on how the economy performs next year, citing the relationship between Canada and the US as one of the biggest factors set to influence the bank’s rate policy in 2026, with cuts possible, if the economy takes a steep downward turn as a result of a US tariff escalation. Claire Fan, senior economist at the Royal Bank of Canada. looks further into the future in a note to clients. “We think the bank is done with rate cuts, and that the next change in interest rates is more likely to be a hike,” wrote Fan, “Our base case assumes this won't occur until 2027, but risks are tilted toward an earlier move.” .Graham sees the bank staying on hold. “On Wednesday, the bank pointed to the economy’s continued resilience to US tariffs, including stronger-than-expected GDP and inflation reports,” she says. “However, it expects conditions to grow more volatile in 2026, as exports weaken further. It also expects inflation to stick close to its 2% target in the near term, as economic slack will offset any trade volatility and upward pressure on prices. This all supports an ongoing rate hold stance for the foreseeable future.” “While the bank pivoting to a rate hold stance ends rate relief for borrowers, it’s good news for anyone with passive investments such as high interest savings accounts (HISAs), GICs, and certain types of loans, all of which are priced on variable rates,” she adds. “A rate hold should mean no further decreases to the rate of return for these products, and stability for account holders and investors." The bank’s first three rate announcements in 2026 are January 28, March 18 and April 29.
