Cost- The Bank of Canada's policy rate has held at 2.25% since its October 2025 cut, down from a 5.0% peak reached earlier in the cycle.
- Variable-rate mortgage payments have fallen substantially from their peak alongside the policy rate.
- Fixed rates have not fallen by nearly as much, since they track longer-term bond yields rather than the policy rate directly.
What actually happened
The Bank of Canada has kept its overnight policy rate at 2.25% through its recent rate announcements, unchanged since it cut to that level in October 2025. That's a substantial decline from the 5.0% peak reached during the 2022–2023 tightening cycle, when the Bank raised rates aggressively to bring down inflation that had run well above its 2% target. With inflation now closer to target, the Bank has held rather than cut further at its most recent decisions, signalling it sees the current rate as roughly appropriate for now rather than still restrictive.
What it means if you have a variable-rate mortgage
Variable-rate mortgage holders have seen their payments fall meaningfully as the policy rate came down from its peak, since variable rates are directly tied to each lender's prime rate, which moves in step with the Bank of Canada's policy rate. If your variable rate hasn't changed at all since your last review, and the Bank has held steady for several consecutive announcements, that's expected — a hold means no further movement in either direction until the Bank's next decision. Use the mortgage payment calculator to see what your payment looks like at the current prevailing rate.
Why fixed rates didn't fall nearly as far
Fixed mortgage rates are priced off Government of Canada bond yields with a similar term, not off the Bank of Canada's overnight rate directly — and bond yields reflect where markets expect rates to be over the next several years, not just where they are today. Through spring 2026, bond yields moved up somewhat on trade and tariff-related uncertainty even as the policy rate held steady, which is part of why fixed rates have stayed noticeably higher than the drop in the policy rate alone would suggest. Anyone comparing today's fixed rate to the policy rate and expecting a similarly steep discount is comparing two numbers that don't move together.
If you're weighing a fixed renewal against variable right now, check your own numbers on the mortgage renewal calculator.
- Bank of Canada — accessed September 2026