The Bank of Canada held its benchmark overnight rate at 2.25% this morning — the fifth straight decision to leave rates unchanged, following holds in January, March, and April. For anyone buying, selling, or renewing a mortgage in the Greater Toronto Area, the message is continuity: the cost of borrowing isn't moving down, but it isn't spiking either.
Here is what the decision actually means on the ground, and why the fixed-versus-variable conversation matters more right now than the headline rate itself.
What the Bank decided
The overnight rate stays at 2.25%, with the prime rate holding at 4.45%. The Bank pointed to a difficult balancing act: economic growth has been weak — Canada's GDP slipped slightly in the first quarter of the year — while inflation has crept back up to 2.8%, driven largely by higher energy prices tied to ongoing conflict in the Middle East.
In plain terms, the Bank can't cut rates to stimulate a soft economy without risking that elevated oil prices turn into lasting inflation. So it's waiting. The Bank signalled it intends to "look through" the war's short-term effect on prices, but won't allow energy costs to become embedded in the broader inflation picture. Its own projection has inflation easing back toward the 2% target in 2027.
The next scheduled rate announcement is July 15, 2026.
The real story: fixed and variable rates are moving in opposite directions
Here's the part that trips up a lot of buyers. A Bank of Canada hold does not mean all mortgage rates are frozen. Fixed and variable rates are driven by two different engines.
Variable rates track the prime rate, which moves with the Bank's overnight rate. With the Bank on hold, variable mortgage rates are stable — the best insured five-year variable rates currently sit around 3.35%.
Fixed rates are driven by government bond yields, not the Bank's decision directly. And bond yields have been climbing as markets price in inflation uncertainty from the energy shock. That's pushed fixed rates up in recent weeks — by roughly 25 to 40 basis points — even as the Bank sits still. The best insured five-year fixed rates are now hovering around 4%, and rates at the big banks run higher.
So we have an unusual split: the lowest variable rate on the market is currently cheaper than the lowest five-year fixed. That hasn't been the typical picture for most of the past two years, and it changes the math for buyers weighing certainty against cost.
What it means if you're buying in Mississauga, Oakville, Milton, or Burlington
For buyers, the hold is a window of predictability. You can shop and make offers without worrying that a surprise rate move will reprice your budget mid-search. The affordability picture isn't improving dramatically, but it's stable — and stability is something the market has been short on.
The fixed-versus-variable decision deserves a real conversation with a licensed mortgage professional, not a default choice. A variable rate is cheaper today but exposed if energy-driven inflation forces the Bank's hand later in the year. A fixed rate costs more upfront but locks in your payment regardless of what bond yields do next. Neither is automatically "right" — it depends on your timeline, your risk tolerance, and how long you plan to hold the property.
If you're renewing, plan ahead
A large wave of Canadian homeowners is coming up for renewal for the first time since rates climbed in 2022. Many of these borrowers locked in at the ultra-low rates of a few years ago and will be renewing into a meaningfully higher environment. If your renewal is on the horizon, the time to run the numbers is now — compare what you're paying against current offers, factor in any penalty for breaking early, and know your renewal options before the letter arrives.
Where rates may head next
Most of Canada's big banks expect the policy rate to stay near 2.25% through the rest of 2026, with cuts unlikely unless the economy weakens sharply or trade tensions with the U.S. escalate. One notable outlier, Scotiabank, has flagged the possibility of rate increases of up to 75 basis points by year-end if inflation proves sticky. Adding to the uncertainty, the mandatory CUSMA trade review formally begins in July, which could keep upward pressure on longer-term bond yields.
The honest takeaway: the direction of rates from here is genuinely unsettled. The smartest move in an uncertain market is to keep your finances organized, watch bond yields if you're leaning fixed, and lock in a rate hold while you make your decision.
Staying on top of your numbers matters more in an uncertain rate environment — whether you're tracking your real estate income, managing expenses, or preparing for tax season. BrokerBooks helps Canadian real estate professionals and the self-employed capture every receipt, track HST in real time, and generate CRA-ready reports in seconds. Learn more at brokerbooks.ca.
This article is general market commentary and not mortgage or financial advice. Rate figures are accurate as of the publication date and change frequently; confirm current rates with a licensed mortgage professional.