The Bank of Canada has held its policy interest rate at 2.25%, extending the pause that has been in place since October 2025.

For Canadian homeowners and homebuyers, the decision provides some stability—but it does not mean all mortgage rates will stay where they are.

The bigger story is that the Bank is now balancing a stronger Canadian economy against renewed inflation risks from higher energy prices and trade tensions.

Key Takeaways

• The Bank of Canada kept its policy rate at 2.25%.
• Variable mortgage rates should see little immediate change from this decision.
• Fixed mortgage rates can still move because Canadian bond yields have risen.
• Canada’s economy grew at a stronger 3.3% pace in Q2.
• Inflation is around 3%, but much of the pressure is coming from gasoline.
• Further Bank of Canada rate cuts may be harder to justify if inflation pressures broaden.

Why Did the Bank of Canada Hold Rates?

The Bank’s decision reflects an economy that has improved, but still faces significant uncertainty.

Canada’s economy grew by 3.3% in the second quarter, with gains in consumer spending, exports, business investment and housing activity. The unemployment rate also edged down to 6.4% in July.

At the same time, inflation remains a concern.

CPI inflation has recently been running around 3%, largely because of higher gasoline prices. The encouraging part is that inflation excluding gasoline was 2.2% in July, while the Bank’s preferred core inflation measures remained close to its 2% target.

In simple terms, the Bank doesn’t currently see enough weakness to justify another rate cut, but it also doesn’t see a clear reason to raise rates.

What Does This Mean for Canadian Mortgage Rates?

This is where borrowers need to separate variable and fixed mortgage rates.

Variable Mortgage Rates

Variable-rate mortgages are closely connected to lenders’ prime rates, which are influenced by the Bank of Canada’s policy rate.

Because the Bank held at 2.25%, borrowers shouldn’t expect an immediate Bank-of-Canada-driven change to variable mortgage rates.

The policy rate has now remained at 2.25% since the Bank’s October 2025 rate cut.

Fixed Mortgage Rates

Fixed mortgage rates are a different story.

They are influenced more heavily by government bond yields than by the Bank of Canada’s overnight rate. The Bank noted that long-term bond yields have increased globally, including in Canada.

That means the Bank can leave its rate unchanged while lenders still adjust fixed mortgage rates.

The important takeaway: A Bank of Canada rate hold does not guarantee that today’s fixed mortgage rates will still be available several weeks from now.

What Does This Mean for Homebuyers?

For buyers waiting for significantly lower mortgage rates before entering the market, the path forward has become less certain.

Canada’s housing market has shown some improvement after several weak quarters, but affordability remains a challenge in many markets. At the same time, stronger economic growth and renewed inflation risks could make additional Bank of Canada cuts less likely in the near term.

Rather than trying to perfectly time the next rate move, buyers may benefit from focusing on what they can control:

• their monthly payment and overall budget;
• the mortgage amount they comfortably qualify for;
• fixed versus variable options;
• prepayment flexibility and penalties; and
• whether a rate hold is available while they shop for a home.

What About Homeowners Renewing Their Mortgage?

If your mortgage renewal is approaching, don’t assume waiting will automatically produce a lower rate.

The Bank of Canada’s next scheduled rate announcement is October 28, 2026, when it will also publish a new Monetary Policy Report.

Between now and then, bond yields, inflation expectations and economic data can all influence mortgage pricing.

This makes it worthwhile to review renewal options early and compare your existing lender’s offer with other available mortgage products.

The Bigger Picture

The Bank of Canada is effectively walking a narrow path.

Canada’s economy is recovering, but there is still excess capacity. Meanwhile, higher oil prices and new tariffs create the risk that businesses face higher costs and eventually pass some of those costs on to consumers.

If inflation stays concentrated in energy, the Bank may have room to remain patient.

If higher costs begin spreading across the economy, however, the conversation could shift from when rates might fall again to whether rates need to remain higher for longer—or eventually increase.

For mortgage borrowers, that makes flexibility more important than trying to predict the Bank’s next move.

Bottom Line

The Bank of Canada holding its policy rate at 2.25% provides some welcome stability, particularly for variable-rate borrowers.

But a rate hold isn’t the same thing as a mortgage-rate freeze.

Fixed mortgage rates can move independently as bond yields change, while future Bank of Canada decisions will depend heavily on inflation, economic growth, trade developments and energy prices.

If you’re buying a home, renewing a mortgage or considering a refinance, the better question isn’t simply, “Where are rates going?”

It’s “Which mortgage strategy works for me if rates don’t move the way I expect?”

That approach can help you make a sound financing decision without having to perfectly predict the next interest-rate announcement.

Frequently Asked Questions

What is the Bank of Canada interest rate now?

As of September 2026, the Bank of Canada’s target for the overnight rate is 2.25%. The rate has been at this level since October 2025.

Will variable mortgage rates change after this announcement?

There should be little immediate impact from the September decision because the Bank of Canada did not change its policy rate. Individual lender pricing can still vary.

Can fixed mortgage rates rise even when the Bank of Canada holds rates?

Yes. Fixed mortgage rates are influenced heavily by government bond yields and financial-market expectations. They can rise or fall without a Bank of Canada rate change.

Will the Bank of Canada cut rates again in 2026?

It’s possible, but far from guaranteed. Stronger economic growth and increased inflation risks make the outlook less clear. The Bank has said it will assess both the sustainability of Canada’s recovery and the inflation outlook before adjusting monetary policy.

When is the next Bank of Canada rate announcement?

The next scheduled Bank of Canada interest rate decision is October 28, 2026. A new Monetary Policy Report is also scheduled for that date.

Cedric Pelletier
Mortgage Associate – Maximal Mortgages

Canadian fixed mortgage rates are moving higher again as rising global bond yields increase borrowing costs for lenders.

The five-year Government of Canada bond yield has moved toward a 12-month high, prompting many lenders to increase three- to five-year fixed mortgage rates.

For Canadians buying a home or renewing a mortgage, the key point is simple:

Fixed mortgage rates can rise even when the Bank of Canada doesn’t change its policy rate.

Key Takeaways

• Rising bond yields are putting upward pressure on Canadian fixed mortgage rates.
• Fixed rates and Bank of Canada rates do not always move together.
• Variable mortgage rates are more directly influenced by the Bank of Canada.
• Global debt, inflation and geopolitical uncertainty are contributing to higher bond yields.
• Borrowers should choose a mortgage based on their budget and risk tolerance, not just predictions about where rates are headed.

Why Are Canadian Fixed Mortgage Rates Rising?

Fixed mortgage rates are closely connected to government bond yields.

For example, the five-year Government of Canada bond yield is an important benchmark for five-year fixed mortgage pricing.

When bond yields rise, lenders may face higher funding costs. Those costs can eventually be passed along to borrowers through higher fixed mortgage rates.

Recently, lenders have increased many three- to five-year fixed rates by roughly 0.10 to 0.20 percentage points.

That may sound small, but even modest rate increases can make a noticeable difference to monthly mortgage payments.

What’s Pushing Bond Yields Higher?

Several global forces are putting pressure on bond markets.

One of the biggest is government debt.

U.S. federal debt has surpassed US$40 trillion, while other major economies are also dealing with large government deficits and borrowing requirements.

Investors are also concerned about persistent inflation and geopolitical conflicts that could keep energy prices elevated.

When investors see more inflation or financial risk ahead, they generally demand higher yields to hold long-term bonds.

Because Canadian financial markets are closely connected to global markets, particularly the United States, rising U.S. Treasury yields can put upward pressure on Canadian bond yields as well.

Fixed vs. Variable: Why the Difference Matters

Fixed and variable mortgage rates are influenced by different parts of the financial system.

Fixed mortgage rates are largely influenced by bond yields and lender funding costs.

Variable mortgage rates are more directly connected to lender prime rates and the Bank of Canada’s policy rate.

That means fixed mortgage rates can rise while variable rates remain relatively stable.

This can make variable mortgages look more attractive, but they come with a different risk: if the Bank of Canada raises rates in the future, variable borrowing costs could increase.

Which mortgage should you choose?

A fixed mortgage may be worth considering if predictable payments and protection against higher rates are priorities.

A variable mortgage may make sense if you have more flexibility in your budget and can comfortably handle potential rate increases.

The important question isn’t simply “Which rate is lower today?”

It’s “Which mortgage can I comfortably manage if rates move against me?”

What This Means for Homebuyers and Renewals

If you’re buying a home or renewing a mortgage soon, rising bond yields are worth watching.

You may want to:

• Ask about a mortgage rate hold if you’re actively buying or approaching renewal.
• Compare fixed and variable options rather than assuming one is automatically better.
• Test your budget against higher-rate scenarios.
• Start shopping for a renewal early instead of automatically accepting your lender’s offer.
• Compare mortgage features and penalties along with the interest rate.

Trying to perfectly time the bottom of the mortgage market is difficult. Bond markets can move quickly, and lenders can adjust fixed rates before economic conditions appear to have changed significantly.

The Bottom Line

Rising Canadian fixed mortgage rates are another reminder that the Bank of Canada is only one part of the mortgage-rate story.

Global government debt, inflation expectations, energy prices and geopolitical uncertainty can all influence bond yields — and ultimately the fixed mortgage rates Canadians are offered.

If you’re buying, refinancing or renewing, focus less on predicting exactly where rates will go and more on choosing a mortgage that fits your financial situation.

A good mortgage strategy should still work even if interest rates don’t move the way you expected.

This article is for general educational purposes and is not personalized mortgage or financial advice.

FAQ

Why are Canadian fixed mortgage rates going up?

Fixed mortgage rates are rising because Government of Canada bond yields have increased. Higher bond yields can increase lenders’ funding costs and lead to higher fixed mortgage pricing.

Does the Bank of Canada control fixed mortgage rates?

Not directly. Bank of Canada decisions have a stronger direct influence on variable mortgage rates. Fixed rates are more closely connected to bond markets.

Should I choose a fixed or variable mortgage right now?

It depends on your finances and comfort with risk. Fixed mortgages provide payment certainty, while variable mortgages can offer different pricing but expose borrowers to future Bank of Canada rate changes.

Should I lock in a mortgage rate?

If you’re buying or renewing soon, asking about a rate hold may be worthwhile when fixed rates are rising. Compare the rate, term, penalties and mortgage features before making a decision.

Cedric Pelletier
Mortgage Associate – Maximal Mortgages

Canadian Housing Market Rebalances in July 2026

Canada’s housing market continued to improve in July, with sales rising, new listings falling, and home prices posting their first monthly increase in nearly two years.

The bigger story, however, is balance. Many Canadian markets are moving away from buyer- or seller-dominated conditions and toward a more normal environment.

Key Takeaways

• Home sales increased 0.5% month-over-month, the fourth consecutive monthly gain.
• New listings fell 1.6%, the third straight monthly decline.
• The sales-to-new-listings ratio reached 51.3%, within balanced-market territory.
• Canada had 4.7 months of inventory, slightly below its long-term average.
• The MLS® Home Price Index increased 0.1%, its first monthly gain since November 2024.
• Prices were still 3.3% lower than July 2025.

What Does a More Balanced Market Mean?

CREA generally considers a sales-to-new-listings ratio between 45% and 65% consistent with a balanced housing market.

July’s 51.3% reading suggests neither buyers nor sellers have a significant advantage nationally.

For buyers, that can mean more time to make decisions, fewer rushed offers and greater confidence that prices are stabilizing.

For sellers, improving sales combined with fewer new listings could gradually create stronger demand if the trend continues.

Are Canadian Home Prices Starting to Recover?

Possibly, but it’s too early to call it a rebound.

The national MLS® Home Price Index increased just 0.1% in July. While small, it was the first monthly increase since November 2024.

Prices remained 3.3% below July 2025 levels, so stabilization is a better description than a new housing boom.

Mortgage Rates Remain the Wild Card

Housing affordability isn’t determined by home prices alone. Mortgage rates can significantly change the monthly cost of buying a home.

The Bank of Canada’s next rate announcement is scheduled for September 2, 2026.

But borrowers should remember that fixed mortgage rates can change even when the Bank of Canada does nothing. Fixed rates are heavily influenced by bond yields, while variable rates are more directly connected to the Bank of Canada’s policy rate.

Global bond yields have been under upward pressure, which could limit how much relief Canadian fixed mortgage borrowers see.

What Should Buyers Do?

A more balanced market can be good news, but it doesn’t mean buyers should rush.

Instead, use this period to:

• get a mortgage pre-approval;
• establish a comfortable monthly payment;
• compare fixed and variable mortgage options;
• understand conditions in your local market; and
• budget for closing costs and ongoing homeownership expenses.

National statistics tell us where the market is heading. Your personal finances should determine when you’re ready to buy.

Bottom Line

Canada’s housing market appears to be moving toward more normal conditions.

Sales are slowly improving, inventory is tightening and prices are showing early signs of stabilization.

For buyers, that could mean a healthier market with less pressure. But with mortgage rates still influenced by uncertain global bond markets, affordability — not market timing — should remain the priority.

Is Canada in a buyer’s or seller’s market?

Nationally, Canada was broadly balanced in July, with a sales-to-new-listings ratio of 51.3%. Local markets can be very different.

Are Canadian home prices rising again?

The national MLS® Home Price Index increased 0.1% in July, its first monthly gain since November 2024. However, prices remained 3.3% below July 2025.

Will mortgage rates fall if the Bank of Canada cuts rates?

Not necessarily. Variable mortgage rates are closely tied to Bank of Canada policy, while fixed rates are influenced primarily by bond yields.

Is now a good time to buy a home?

That depends more on your budget, income stability, mortgage options and local housing market than on national headlines. A balanced market can give prepared buyers more room to make careful decisions.

Cedric Pelletier
Mortgage Associate
Maximal Mortgages 2026

Canada’s inflation rate moved higher in July, but the headline number doesn’t tell the whole story.

The Consumer Price Index (CPI) rose 3.0% year over year in July, up from 2.8% in June. While that might sound like inflation is heating up again, much of the increase came from gasoline and travel costs.

For Canadian homeowners, homebuyers and anyone approaching a mortgage renewal, the more important question is whether inflation is becoming widespread—or if this is a temporary bump.

Key Takeaways

• Headline inflation increased to 3.0% in July.
• Gasoline prices jumped 25.7% year over year, helping push CPI higher.
• CPI excluding gasoline remained much lower at 2.2%.
• The average of the Bank of Canada’s preferred core inflation measures was about 1.95%.
• Grocery inflation slowed to 3.1%, although food costs continue to pressure household budgets.
• The report does not necessarily signal an immediate Bank of Canada rate increase.

Why Did Inflation Rise?

According to Statistics Canada, gasoline was one of the biggest drivers of July’s higher inflation reading.

Gas prices increased 25.7% c

ompared with a year earlier, partly due to geopolitical tensions and disruptions affecting global energy and shipping routes.

Travel also became more expensive. Travel tour prices increased 15.2% year over year, while air transportation prices rose 12.0%.

But when gasoline is removed from the calculation, inflation was just 2.2%—the same rate for three consecutive months.

That distinction matters for interest rates.

Core Inflation Is the Number to Watch

The Bank of Canada doesn’t make interest-rate decisions based on headline CPI alone. It also looks closely at measures of core inflation, which help identify whether price increases are becoming persistent across the economy.

The average of the Bank’s preferred core measures came in around 1.95%, essentially in line with its 2% inflation target.

In simple terms:

Headline CPI: 3.0%

CPI excluding gasoline: 2.2%
Preferred core measures: about 1.95%

This suggests July’s higher inflation rate was driven more by specific categories than a broad resurgence in inflation.

What Does This Mean for the Bank of Canada?

For now, the numbers support a patient approach.

Higher gasoline prices reduce household purchasing power, but an energy-driven increase in inflation does not automatically require higher interest rates.

The Bank of Canada will be watching to see whether higher energy costs begin spreading into other areas of the economy.

If core inflation remains c

ontained and domestic demand continues to slow, the case for keeping the policy rate unchanged becomes stronger.

Based on the current data, a Bank of Canada hold through the remainder of 2026 remains a reasonable base-case scenario, although future inflation and economic reports could change that outlook.

What Does This Mean for Mortgage Rates?

The answer depends on the type of mortgage.

Variable Mortgage Rates

Variable mortgage rates are closely tied to the Bank of Canada’s policy rate.

If the Bank remains on hold, there would be no Bank of Canada-driven reason for variable mortgage rates to increase.

That could provide some stability for borrowers with variable-rate mortgages or those considering one.

Fixed Mortgage Rates

Fixed mortgage rates work differently.

They are influenced heavily by Government of Canada bond yields, which can move based on expectations for future inflation, economic growth and Bank of Canada policy.

This means fixed mortgage rates can rise or fall even when the Bank of Canada does nothing.

If markets view July’s inflation increase as temporary, upward pressure on fixed rates may be limited. If investors become concerned that inflation is becoming persistent, b

ond yields—and potentially fixed mortgage rates—could rise.

Grocery Inflation Is Slowing, But Canadians Still Feel It

There was some good news for household budgets.

Grocery prices increased 3.1% year over year in July, down from 3.9% in June.

However, grocery inflation has now exceeded overall CPI inflation for 18 consecutive months.

This helps explain why many Canadians may not feel much relief even when inflation indicators improve.

Remember: lower inflation does not mean prices are falling. It means prices are increasing more slowly.

For homeowners already dealing with mortgage payments, property taxes, utilities and insurance, those higher everyday costs still matter.

What Should Homeowners and Buyers Do?

Trying to perfectly predict the next mortgage-rate move is difficult.

Instead, focus on what you can co

ntrol.

If you’re buying a home, build your budget around a comfortable monthly payment—not the maximum mortgage you can qualify for.

If your mortgage is renewing, don’t automatically accept your lender’s first offer. Compare fixed and variable options, rates, penalties and prepayment privileges.

And if you’re deciding between fixed and variable, consider your risk tolerance, income stability and future plans, not simply which rate is lowest today.

Bottom Line

Canada’s 3.0% inflation reading looks more concerning at first glance than it does when you dig into the details.

Gasoline and travel costs were major contributors, while CPI excluding gasoline remained at 2.2% and underlying core inflation stayed around the Bank of Canada’s 2% target.

For mortgage borrowers, the key takeaway is simple:

Don’t make a major mortgage decision based on one inflation headline.

Watch the trend in core inflation, Bank of Canada policy and bond yields. Those indicators can provide a much clearer picture of where Canadian mortgage rates may be heading.

This article is for general educational purposes and should not be considered personalized financial or mortgage advice.

FAQ

Does 3.0% inflation mean mortgage rates will rise?

Not necessarily. The Bank of Canada looks at underlying inflation and broader economic conditions. Fixed mortgage rates also depend heavily on bond yields.

What is core inflation?

Core inflation measures attempt to identify persistent price pressures by reducing the impact of unusually volatile price movements. It can give policymakers a clearer view of the underlying inflation trend.

Should I choose a fixed or variable mortgage?

There is no single answer for every borrower. Fixed rates provide greater certainty, while variable rates provide more exposure to future Bank of Canada rate changes. Your budget and tolerance for changing payments should guide the decision.

Should I wait for mortgage rates to fall before buying?

Not necessarily. Rates are only one part of affordability. Home prices, inventory, income and your personal finances can also change while you wait.

Cedric Pelletier
Mortgage Associate
Maximal Mortgages 2026

Can You Still Be a First-Time Home Buyer in Canada?

Many Canadians assume that once you’ve owned a home, you’ve permanently lost access to first-time home buyer programs.

That’s not always true.

The key is that Canada doesn’t have one universal definition of a first-time home buyer. Federal programs, mortgage insurance rules, and provincial incentives all have different eligibility requirements.

Key Takeaways

• Previous home ownership doesn’t always disqualify you.
• Many federal programs use a four-year occupancy rule, not a lifetime ownership test.
• Provincial rebates often have completely different rules.
• Your eligibility depends on which program you’re applying for.

Why the Rules Are Different

Some programs ask:

• Have you ever owned a home?
• Did you live in the home you owned?
• Was it your principal residence?
• Did you inherit an ownership interest?
• Have you recently separated from a spouse or common-law partner?

Because each program asks different questions, you could qualify for one benefit but not another.

Federal Programs May Give You a Second Chance

Programs like the First Home Savings Account (FHSA), Home Buyers’ Plan (HBP), and Home Buyers’ Amount generally look at whether you’ve lived in a home you owned during the current year and previous four calendar years.

If you sold your home years ago and have been renting since, you may qualify again.

Provincial Rules Can Be Stricter

This is where many buyers get caught off guard.

For example, Ontario’s Land Transfer Tax Refund generally uses a lifetime ownership test, meaning previous ownership can permanently eliminate eligibility.

Meanwhile, provinces like Alberta don’t charge a traditional land transfer tax, so different rules apply.

Why This Matters

You might qualify for:

• An FHSA
• The Home Buyers’ Plan
• The Home Buyers’ Amount
• A 30-year insured mortgage (if eligible)

…while not qualifying for a provincial tax rebate.

The same buyer can receive different answers depending on the program.

The Bottom Line

Don’t assume you’ve lost every first-time home buyer benefit simply because you’ve owned a home before.

Every program has its own definition, and the differences could be worth thousands of dollars.

Before making a decision, speak with a mortgage professional who can review your specific situation and identify which programs you may still qualify for.

Frequently Asked Questions

Can I be a first-time home buyer if I owned a home years ago?
Yes. Many federal programs allow you to qualify again if you haven’t lived in a home you owned during the previous four years.

Does owning a rental property disqualify me?
Not always. Some programs focus on occupancy, while others look at ownership history.

Do all provinces use the same rules?
No. Provincial incentives have their own eligibility requirements, which may differ significantly from federal programs.

Cedric Pelletier
Mortgage Associate
780-220-7617

Je parle Francais 🙂

Choosing between a 25- and 30-year amortization is one of the biggest mortgage decisions you’ll make. Many people assume a 30-year amortization is a poor financial choice because you’ll pay more interest over time.

While that’s true on paper, it doesn’t tell the full story.

The best option depends on your cash flow, financial goals, and how you use the money you save each month.

Key Takeaways

• A 30-year amortization lowers your monthly payment.
• Total interest is only one part of the decision.
• Lower payments can improve cash flow and financial flexibility.
• The right choice depends on your personal financial strategy—not just the math.

Why Total Interest Doesn’t Tell the Whole Story

Most mortgage comparisons focus on lifetime interest costs. While a 30-year amortization usually results in more total interest, those payments are spread over decades.

Because of inflation, a dollar paid 25 or 30 years from now isn’t worth the same as a dollar today. Financial planners call this the time value of money.

That’s why looking only at total interest can make a longer amortization appear more expensive than it really is.

The Biggest Benefit: Cash Flow

The main advantage of a 30-year amortization is lower required monthly payments.

That extra cash can be used to:

• Build an emergency fund
• Invest through a TFSA or RRSP
• Pay off higher-interest debt
• Cover growing family expenses
• Reduce financial stress

For many homeowners, flexibility is just as valuable as paying off the mortgage faster.

Flexibility Matters

Choosing a 30-year amortization doesn’t mean you’re locked into paying it off over 30 years.

Most Canadian mortgages allow prepayments, so you can increase your payments or make lump-sum contributions whenever your budget allows.

Think of a 30-year amortization as creating a lower payment floor, while giving you the option to pay it down faster.

When Does a 30-Year Amortization Make Sense?

A longer amortization may be a smart option if you:

• Want to improve monthly affordability
• Have variable or commission-based income
• Plan to invest the payment savings
• Prefer keeping more cash available for unexpected expenses

On the other hand, if your goal is to become mortgage-free sooner and you comfortably afford the higher payment, a 25-year amortization may be the better fit.

The Bottom Line

A 30-year amortization isn’t inherently better—or worse—than a 25-year one.

It’s simply a financial tool.

For some borrowers, paying the mortgage down faster is the right move. For others, lower payments provide flexibility, better cash flow, and opportunities to grow wealth elsewhere.

The best mortgage strategy isn’t about paying the least interest—it’s about choosing the option that supports your overall financial goals.

Frequently Asked Questions

Is a 30-year amortization a bad idea?

Not necessarily. It lowers monthly payments and provides more flexibility, but it generally results in higher total interest if you make only the minimum payments.

Can I pay off a 30-year mortgage faster?

Yes. Most Canadian mortgages include prepayment privileges that allow you to make extra payments and reduce your amortization.

Which amortization is best?

There isn’t a one-size-fits-all answer. Your income, cash flow, financial habits, and long-term goals should determine which option is right for you.

Cedric Pelletier
Mortgage Associate – Maximal Mortgages
780-220-7617

Key Takeaways

• Lower inflation doesn’t automatically make variable rates the better choice.
• Today’s mortgage pricing still favours many fixed-rate options.
• A 3-year fixed offers a strong balance of stability and flexibility.
• The best mortgage depends on your financial situation—not rate forecasts.

Lower Inflation Doesn’t Change Everything

With inflation easing, many Canadians expect variable mortgages to become the obvious choice.

Not so fast.

Mortgage rates are priced based on what financial markets expect to happen—not just today’s inflation. Much of the anticipated movement in Bank of Canada rates is already reflected in current mortgage pricing.

Why the 3-Year Fixed Stands Out

For many borrowers, a 3-year fixed mortgage continues to hit the sweet spot by offering:

• Predictable payments
• Competitive rates
• Flexibility to renew sooner if rates decline

The cost of locking in certainty is currently smaller than many people think.

Variable Mortgages Still Have a Role

A variable mortgage can still be a good fit if you:

• Have a stable income
• Can comfortably handle payment changes
• Want maximum flexibility
• Expect to sell or refinance before your term ends

Choosing a mortgage isn’t about predicting rates perfectly—it’s about choosing the option that best fits your financial goals.

The Bottom Line

Despite lower inflation, a 3-year fixed mortgage remains one of the strongest values in today’s market. It offers stability without giving up much in potential savings, making it a smart option for many Canadians renewing or buying a home.

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FAQ

Does lower inflation mean variable mortgages are better?

Not necessarily. Current mortgage rates already reflect market expectations for future Bank of Canada decisions.

Why are 3-year fixed mortgages popular right now?

They provide payment certainty while allowing borrowers to renew sooner if rates move lower.

Who should consider a variable mortgage?

Borrowers with stable finances, lower debt, and a higher tolerance for changing interest rates.

Cedric Pelletier
Mortgage Associate – Maximal Mortgages

Bank of Canada Holds Rates: What It Means for Your Mortgage

The Bank of Canada is widely expected to keep its policy rate at 2.25%, marking a sixth straight rate hold. While that decision may not surprise markets, the Bank’s outlook could provide important clues about where interest rates are headed next.

For homeowners and buyers, the focus is shifting from “Will rates be cut?” to “When could rates start rising again?”

Key Takeaways

• The Bank of Canada is expected to keep its policy rate at 2.25%.
• Inflation has risen above 3%, increasing pressure for future rate hikes.
• Canada’s economy is showing signs of recovery after a slow start to 2026.
• Some economists expect rate hikes later this year, while others don’t see increases until 2027.

Why Is the Bank Holding Rates?

The Bank continues to balance inflation with economic growth. While inflation remains above target, there is still enough slack in the economy to justify waiting before raising rates.

This gives policymakers time to determine whether higher inflation is temporary or becoming more widespread.

Inflation Is Back in Focus

Higher energy costs have pushed inflation above 3%, but the Bank will be watching for signs that rising prices are spreading into wages and everyday goods.

If inflation stays elevated, interest rate hikes become more likely.

What Are Canada’s Big Banks Predicting?

Economists agree a rate hold is likely this week, but opinions differ on what comes next.

• Scotiabank: Expects rate hikes beginning in late 2026.
• RBC, CIBC & National Bank: Forecast hikes in 2027.
• BMO & TD: Expect rates to remain unchanged through 2027.

The timing will depend on future inflation and economic data.

What This Means for Mortgage Borrowers

A rate hold doesn’t guarantee lower mortgage rates ahead. Fixed mortgage rates are influenced by market expectations, and lenders may adjust pricing if investors expect future Bank of Canada hikes.

If you’re buying a home or renewing your mortgage, it’s a good time to review your options and plan for different rate scenarios rather than waiting for rates to fall further.

Bottom Line

The Bank of Canada is expected to leave rates unchanged, but its messaging may be more important than the decision itself. With inflation remaining above target and economic growth improving, future rate hikes are becoming part of the conversation again.

For borrowers, staying informed and planning ahead is the best way to navigate an uncertain rate environment.

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FAQ

Will the Bank of Canada raise rates this week?

Most economists expect the Bank to hold its policy rate at 2.25%.

Why are rate hikes being discussed?

Inflation has climbed above the Bank’s 2% target, raising concerns that higher interest rates may be needed if price pressures persist.

Should I lock in my mortgage?

That depends on your financial goals and risk tolerance. Speaking with a mortgage professional can help you decide whether a fixed or variable rate is the better fit.

Canada’s economy grew 0.5% in April, beating expectations and marking its strongest monthly gain since last summer. While that’s positive news for the economy, it may also keep pressure on fixed mortgage rates.

Key Takeaways

• Canada’s GDP rose 0.5% in April, above forecasts.
• Growth was led by oil and gas, mining, and construction.
• The 5-year Government of Canada bond yield climbed back above 3%.
• Strong U.S. job openings also pushed bond yields higher.
• Markets now see a roughly 50/50 chance of another Bank of Canada rate hike by year-end.

Why It Matters

Fixed mortgage rates are largely driven by Government of Canada bond yields. As stronger economic data pushes yields higher, lenders have less room to lower fixed mortgage rates.

While Canada’s economy is showing resilience, challenges remain, including trade uncertainty, tariffs, and slower population growth. Even so, stronger-than-expected GDP has reinforced expectations that interest rates could stay higher for longer.

What Homebuyers Should Know

If you’re shopping for a mortgage or renewing this year, don’t expect fixed rates to fall quickly unless bond yields move lower. Economic data over the coming months—especially inflation and employment—will continue to shape where rates go next.

FAQ

Why did bond yields rise?
Stronger Canadian GDP and better-than-expected U.S. job openings increased expectations that interest rates could remain elevated.

Does this mean mortgage rates will rise?
Not necessarily, but higher bond yields typically reduce the likelihood of lower fixed mortgage rates in the near term.

Cedric Pelletier – Mortgage Associate
Maximal Mortgages

Key Takeaways

• Headline inflation increased to 3.2%, mainly due to higher energy prices.
• Core inflation remains close to the Bank of Canada’s 2% target.
• Most economists believe this spike is temporary.
• Mortgage rates could still face upward pressure from rising U.S. bond yields.

Why This Matters

Canada’s inflation climbed to 3.2% in May, but the increase was largely driven by a temporary jump in gas prices. The Bank of Canada pays closer attention to core inflation, which remained near 2%, suggesting underlying inflation is still under control.

While this supports keeping the overnight rate unchanged, fixed mortgage rates depend on bond yields—and those continue to rise despite softer inflation data.

What Could Push Rates Higher?

Markets are looking beyond inflation. Rising U.S. government bond yields, ongoing fiscal concerns, trade uncertainty, and continued AI-driven investment are all putting upward pressure on longer-term interest rates.

What Borrowers Should Consider

If you’re buying a home or renewing your mortgage, don’t assume lower inflation automatically means lower mortgage rates. Fixed rates could remain elevated even if the Bank of Canada stays on hold.

For borrowers seeking certainty, a 3-year fixed or hybrid mortgage may provide a balanced approach while economic uncertainty continues.

FAQs

Will the Bank of Canada cut rates soon?
Most economists expect the Bank to keep rates steady unless core inflation rises meaningfully.

Why are fixed mortgage rates still high?
Fixed rates are driven by bond yields, which are being influenced by global economic factors—not just Canadian inflation.

Cedric Pelletier – Mortgage Associate
Maximal Mortgages