Bank of Canada Holds the Rate: What It Means for Canadian Homeowners

Emily Miszk
2 days ago
3 min read

The Bank of Canada held its policy interest rate today, keeping borrowing costs steady for now. While this brings a sense of short-term stability, it does not mean mortgage rates are locked in place — especially when it comes to fixed rates.

Here’s what Canadian homeowners need to understand about this decision and what it signals for the months ahead.

What the Rate Hold Means for Homeowners

A rate hold means the Bank of Canada’s overnight rate remains unchanged at 2.25%. That affects homeowners differently depending on the type of mortgage they have.

Variable-rate mortgage holders If you have a variable-rate mortgage or line of credit, your interest rate and payment remain the same for now. This offers consistency after several years of rate volatility, but it’s important to note there’s no clear signal that cuts are coming soon.

Fixed-rate mortgage holders Fixed-rate mortgages are not directly set by the Bank of Canada. They are influenced by the bond market, and bond yields can move even when the Bank of Canada holds steady. That means fixed mortgage rates can still rise or fall independently of today’s announcement.

Homeowners planning a purchase or renewal If you’re buying or renewing in the near future, today’s announcement matters — but it’s only part of the picture. Timing, bond yields, and inflation data now play a much bigger role in what rates you’ll actually be offered.

Why the Bank of Canada Held the Rate

The decision reflects a cautious approach as economic signals remain mixed.

Inflation is cooling, but not quite settled Overall inflation is expected to hover near the Bank of Canada’s 2% target. However, core inflation — which strips out volatility — is still closer to 2.5%, keeping policymakers cautious.
Economic growth remains fragile Trade volatility and global uncertainty continue to weigh on Canada’s growth outlook. Holding the rate allows the Bank of Canada to monitor how much pressure higher borrowing costs are still placing on households and businesses.
Household debt remains high Canadian households are highly leveraged, and the Bank of Canada is trying to balance easing pressure without reigniting inflation or excessive borrowing.

Important Market Details to Watch Right Now

Even with the rate hold, markets moved quickly — and this is where many homeowners get caught off guard.

The overnight rate remains at 2.25%
There was no clear signal that rate cuts are coming soon
Bond yields matter more for fixed rates, and the 5-year Government of Canada bond yield has now jumped above 3%
Markets are already pricing in the possibility of a rate hike in 2026
If bond yields stay elevated, fixed mortgage rates could rise into the new year