The Bank of Canada has kept its policy interest rate at 2.25%, making it five holds in a row and marking an unchanged rate stemming back to just before Halloween 2025.
Canada’s central bank stated the decision to hold the rate is due to a mix of weak economic activity, continued tensions in the Middle East, and uncertainty about U.S. trade policies.
This news means variable rate mortgage holders will once again see no change to their regular installments. Those eyeing a fixed rate mortgage should be paying attention to bond yields, but the news there isn’t as welcoming — fixed rates have been increasing steadily, complicating things for those who prefer stability.
In a separate Financial Stability Report (FSR) released at the end of May, the Bank of Canada warned financial pressures may be on the horizon for fixed rate mortgage holders who benefitted from ultra-low rates in 2021, especially those in Toronto.
“Over the next 12 months, the last of the five-year, fixed payment mortgages taken out during the pandemic will renew,” the FSR states. “This group represents about 12% of all outstanding mortgages in Canada. On average, these borrowers will see their payments increase by about 15%.”
The FSR did go on to say that Canada’s reported strong income growth over the past five years should make it easier for property owners to manage these payment increases, but those with weaker income growth may have less flexibility.
“At current home prices, only a small share of borrowers would not be able to refinance at renewal — an estimated 4% in 2027, or about 9% of borrowers in the Toronto area,” states the Bank of Canada report.
Looking for a mortgage? The difference between fixed rate and variable rate payments
Let’s make a general comparison here. Using the Canadian Real Estate Association’s posted national average home price of $695,412 as of April 2026, and assuming a 20% down payment with a standard 25-year amortization period, the monthly payment difference would look like this. (Note: for this example, we are using an average of all the rates posted on ratehub.ca as of June 10, 2026):
• Five-year fixed at 4.51% = approximately $3,081 per month
• Five-year variable at 3.89% = approximately $2,903 per month
So, why might someone choose a fixed rate? It really comes down to stability. A fixed rate gives you the peace of mind of knowing exactly what your mortgage payment will be each month, which can make budgeting a lot easier. It may also be a good option if you think interest rates could increase down the road.
A variable rate, on the other hand, means taking on a bit more risk. But if rates stay where they are or decrease, it could help you save thousands of dollars over the length of your mortgage term.
Why did the Bank of Canada choose to not lower its rate?
According to the Canadian Real Estate Association, Canada’s economic performance in the first quarter was weaker than expected, and the Bank noted that domestic financial conditions had loosened since issuing its Monetary Policy Report in April.
Employment strengthened in May, but looking through what is often volatile labour data, the Bank views the labour market as largely unchanged since the beginning of the year.
CPI inflation rose to 2.8% in April largely due to higher energy prices. That said, the Bank made clear that “there has been limited evidence of broad-based pass-through of higher energy prices to other consumer prices.” The Bank expects inflation to remain around 3% in the near term and seems willing to allow that provided inflation does not begin to creep beyond energy and become persistent.
Why working with a REALTOR® is important
Your REALTOR® is your personal real estate MVP. While you’re figuring out financing, they can already get to work behind the scenes. If you’re buying, this means setting up searches for you, attending open houses on your behalf, and asking around to their connections about what might be coming available.
If you’re selling, your REALTOR® can get to work marketing your property right away, getting it ready for staging and compiling documentation, all without severely disrupting your routines.
Thankfully, REALTORS® monitor market trends and housing data to make sure, whether you’re buying or selling, your best interests are kept top of mind.
Don’t put it off any longer. Find your REALTOR® today!
— REALTOR.ca