Bank of Canada Rate Hold: What This Means for Your Mortgage in 2026

The Bank of Canada's recent rate announcement was a hold. Here's what it means for you, your mortgage, and your plans in 2026.

What just happened?

This past Wednesday, January 28, 2026, the Bank of Canada held its key interest rate at 2.25%.

• This is the second rate hold in a row
• Most experts expected this
• The Bank is not rushing to raise or cut rates right now. They are in “wait and see” mode.

The Governor said there is still a lot of uncertainty, especially around U.S. trade and tariffs, so they’re watching carefully before making their next move.

How this affects your mortgage

Here’s how the decision flows down to you:

1. Bank of Canada rate
   Stayed at 2.25%
   This is the starting point for interest rates.
2. Bank prime rate
   Because of the hold, most banks’ Prime Rate is staying put at 4.45%
3. What this means for you

• Variable-rate mortgage holders:
  👉 No change to your rate or payment
• Line of credit (HELOC or unsecured):
  👉 No change
• Fixed-rate mortgage:
  👉 No change (Fixed rates follow the bond market, not the Bank of Canada)

Why did the Bank hold rates?
In simple terms, the economy is slowing, but inflation is mostly under control.

Here’s what they’re seeing:

• Inflation: Around 2–2.5%, close to the Bank’s target
• Unemployment: 6.8%, as of December 2025, hiring is slower
• Economic growth: Slower than expected
• Big uncertainty: As outlined in the BoC press release, "However, the outlook is vulnerable to unpredictable US trade policies and geopolitical risks."

Because of this uncertainty, the Bank is choosing to pause.

Most economists now expect rates to stay about where they are through most of 2026.

What this means for different borrowers

Variable-rate holders

• Your payment stays the same
• You’ve benefited from past rate cuts
• Stay variable if you’re comfortable with ups and downs
• Lock into fixed if you want payment certainty

Mortgage renewals (next 6–12 months)

• Do not wait or auto-renew
• Start early — locking in options now matters

Fixed-rate holders above 5%

• You may have refinance options
• In some cases, this could mean meaningful monthly savings

Home buyers
This is the calmer market many of you were waiting for:

• More homes for sale
• Less pressure
• Fewer bidding wars
• More balanced financing conditions
• Stable interest rates

2026 is not about rushing; it’s about planning smart.

Important reminders

• Fixed mortgage rates follow bond yields, not the Bank of Canada rate changes
• Fixed rates could start to rise later in 2026 if markets expect future increases
• Big rate drops are unlikely in the near term

What’s next?

The next scheduled Bank of Canada rate announcement is March 18, 2026.

A lot will depend on how Canada–U.S. trade talks unfold this year. "Monetary policy is focused on keeping inflation close to the 2% target while helping the economy through this period of structural adjustment. Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today."

One last important note

If your mortgage is coming up for renewal, or you’re thinking about buying, refinancing, or just want to understand your options, please reach out.

A short conversation now can save a lot of money and stress later.

Read the full Bank of Canada press release here.