The Bank of Canada did what was widely expected today from Canadian economists: its policy interest rate will be kept at 2.25%. The Bank’s reasoning for this decision stems from a focus on stability after earlier rate cuts brought borrowing costs down from their recent peaks experienced in 2024.
For Canadians thinking about buying, selling or renewing a mortgage, this decision reinforces a message that has been building for months: interest rates are likely settling into a holding pattern, at least for now.
That doesn’t mean today’s announcement is insignificant. In fact, a steady rate environment can offer some much-needed predictability for many buyers and homeowners.
Here’s how Wednesday’s rate decision could affect Canadian home buyers, sellers and homeowners.
In this article:
- What today’s rate hold means for home buyers
- What sellers should know right now
- What today’s decision means for homeowners and renewals
- What to watch next: the Bank of Canada’s outlook
What today’s rate hold means for home buyers
For prospective buyers, the Bank of Canada’s decision to hold steady at 2.25% is an indicator that rates won’t be moving swiftly this year, barring any unforeseen geopolitical circumstances (and who knows what’s coming down the line these days).
While fixed mortgage rates are already well below where they were a year ago, economists broadly expect them to remain close to current levels in the near term. In January 2025, the average five-year fixed rate was around 6.5%. These days, the average five-year fixed rate hovers in the mid-3% to low-4% range.
It’s a different story for variable mortgages, though. One year ago, variable rate mortgages were typically just under 4%, and today they are averaging a touch higher. This shift reflects how prime-linked mortgage pricing has responded to the Bank of Canada’s policy and bond markets over the past year.
In many parts of the country, buyers are already benefiting from:
- More listings and higher inventory
- Less competition and fewer bidding wars
- More time to negotiate price and conditions
This calmer market environment gives buyers the opportunity to be more patient and strategic, especially first-time home buyers or condo purchasers in markets where supply has built up.
Rather than waiting for further rate cuts, buyers may want to focus on whether today’s prices, payment levels and lifestyle needs align with their long-term plans.
“For buyers who may not follow Bank of Canada announcements or bond market expectations, each subsequent announcement where they do not lower rates any further will be further headline news reinforcing the idea that if you have been waiting for rates to stop falling before jumping into the market, we are now at that point,” the Canadian Real Estate Association’s Senior Economist Shaun Cathcart told us.
What sellers should know right now
For sellers, Wednesday’s announcement is another reminder that we’re no longer in a rapidly rising market driven by cheap credit.
Stable interest rates support buyer confidence, but they don’t automatically translate into higher prices. In many markets, buyers are cautious, financing conditions are common, and properties priced above market value can sit for months.
While holding rates removes some uncertainty it also reinforces the importance of pricing to current market conditions, not yesterday’s benchmarks, and a REALTOR® can help you navigate this accordingly using exclusive tools like the MLS® Home Price Index.
What today’s decision means for homeowners and renewals
For homeowners, particularly those approaching a mortgage renewal, Wednesday’s rate hold offers clarity, but not necessarily relief.
Many Canadians who locked in ultra-low mortgage rates several years ago are renewing into higher payments, even after recent rate cuts. Holding the policy rate steady suggests that further meaningful declines in borrowing costs may be limited in the short term.
That makes preparation key. Homeowners nearing renewal may want to compare fixed and variable rate options, and should consider how changes to amortization or payment structure can affect their budgets.
While every situation is different, today’s announcement reinforces that planning early matters more than waiting.
What to watch next: the Bank of Canada’s outlook
In its latest outlook, the Bank of Canada signalled that economic growth is expected to remain modest through 2026, largely due to ongoing trade disruptions with the United States. While these challenges are weighing on jobs and business investment in some sectors, inflation is expected to stay close to the Bank’s 2% target, which is one of the main reasons interest rates are being held steady.
For real estate, the takeaway is relatively straightforward: no major shocks, but no rapid acceleration either.
Canada’s central bank expects residential investment to improve gradually, supported by pent-up housing demand and previously strong population growth—a narrative shared by Cathcart.
At the same time, affordability challenges remain, particularly in large urban centres like Toronto and Vancouver. Housing supply is continuing to increase, though, which is helping ease some market imbalances.
Overall, the outlook points to a housing market that continues to move forward with new builds forecast to remain at elevated levels, but unevenly across regions and property types.
Prairie provinces such as Saskatchewan and Manitoba are expected to see some of the strongest growth over the next two years, building on already lower average prices. Quebec also stands out, with consistent price increases forecast through 2027, reflecting sustained demand and relative affordability compared with Ontario and British Columbia.
By contrast, higher-priced markets are projected to rise more gradually. After 2025 saw a decrease in average prices for Ontario and British Columbia, these two provinces are expected to experience measured growth in 2026 and 2027. This slower pace may create windows of opportunity for buyers focused on major urban centres, but of course, your best option is to consult with a REALTOR® before making your next move.
Matt Day, Community Manager REALTOR.CA
SOURCE, REALTOR.CA
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