Bank of Canada Holds Rates at 2.25%: What It Means for Your Mortgage in 2026

Governor Tiff Macklem emphasized that the current policy rate is appropriate given the economic outlook, but noted that elevated uncertainty — particularly from U.S. trade tensions — makes it difficult to predict the timing or direction of the next rate change.

After a series of rate cuts that brought rates down from the peak of 5.0% in mid-2024, this pause signals a new chapter for Canadian borrowers. The overnight rate has been held at 2.25% since October 2025.

CPI inflation has settled close to the 2% target, giving the Bank room to hold steady rather than cut further

Ongoing tariff threats from the United States have created significant economic headwinds for Canadian exporters

Employment data has shown mixed signals, with job gains in late 2025 beginning to reverse

• Most Big Six banks expect rate to hold through 2026

• Scotiabank suggests rates could edge higher by late 2026

• Renewers from 2020-2022 face significant payment increases

Over one million Canadian households are expected to renew their mortgages in 2026 — one of the largest renewal waves in recent memory. Many of these borrowers will be transitioning from historically low rates to the current environment.

Begin comparing rates at least 120 days before your renewal date

Your current lender's renewal offer is often not their best rate

A 2 or 3-year fixed term might make sense if you believe rates will decline in the medium term

Brokers have access to dozens of lenders and can often find rates not publicly advertised

The Bank of Canada's decision to hold at 2.25% reflects a central bank that is cautiously optimistic but mindful of significant risks ahead. The period of rapid rate changes is likely behind us, and

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The Bank of Canada held its overnight rate steady at 2.25% in January 2026, marking a pause after aggressive rate cuts. Here's what it means for fixed and variable mortgage holders across Canada.