Canadian mortgage rate forecast 2026: what to expect for the rest of the year
Where Canadian mortgage rates stand in 2026, the Bank of Canada outlook, fixed vs variable rate trends, and what the renewal crisis means for borrowers.
After a dramatic rate hiking cycle in 2022-2023 and a series of cuts through 2024-2025, Canadian mortgage rates have entered a period of relative stability in 2026. The Bank of Canada has held its overnight rate at 2.25% since October 2025, and most major forecasters expect rates to remain near current levels for most of 2026. But the picture is more nuanced than a simple "rates are stable" headline suggests — fixed and variable rates are moving in different directions, and the path forward depends heavily on inflation, trade uncertainty, and global bond markets. This guide breaks down exactly where rates stand, where they are heading, and what it means for your mortgage.
Where Canadian mortgage rates stand today (2026)
As of June 2026 the Canadian mortgage rate environment looks like this:
These are typical market rates — your actual rate will depend on your credit score, down payment, lender, and mortgage type. Always get quotes from multiple lenders or work with a mortgage broker to find the best available rate.
Bank of Canada rate decisions — what happened and what is coming
The rate cycle in review
The Bank of Canada raised its overnight rate from 0.25% to 5.00% between March 2022 and July 2023 — one of the fastest rate hiking cycles in Canadian history. It then held at 5.00% before beginning to cut in June 2024, ultimately reducing the rate to 2.25% by October 2025 through a series of seven cuts.
Where rates stand now
As of the March 2026 announcement the Bank of Canada held its overnight rate at 2.25% — unchanged since October 2025. The Bank has indicated this level is within the neutral rate range where monetary policy neither stimulates nor restricts the economy.
What the Bank of Canada is watching
The Bank of Canada makes rate decisions 8 times per year. For the remainder of 2026 it is closely monitoring:
- Inflation: The Bank wants to keep inflation near its 2% target. Energy price increases driven by global tensions and trade disruptions are adding upward pressure that the Bank must weigh carefully.
- Trade uncertainty: US-Canada trade tensions and tariff uncertainty are creating economic headwinds that could slow growth — a factor that argues for keeping rates stable or cutting.
- Employment: Rising unemployment gives the Bank room to hold or cut without fueling inflation.
- Global bond markets: Rising US Treasury yields and Government of Canada bond yields influence fixed mortgage rates regardless of what the Bank of Canada does.
Rate forecast for remainder of 2026
Most major Canadian banks expect the overnight rate to remain at 2.25% for the rest of 2026:
- RBC, TD, BMO, CIBC: Hold at 2.25% through end of 2026
- Scotiabank and National Bank: See risk of 1-2 rate hikes of 0.25% each if inflation proves sticky
- Bond markets: Pricing in a slight upward bias for late 2026
Bottom line: Rates are more likely to stay flat or rise slightly than to fall further in 2026. The era of rate cuts that characterized 2024-2025 appears to be over for now.
Fixed mortgage rates in 2026 — trending upward
While the Bank of Canada rate has been stable, fixed mortgage rates have been quietly rising in 2026. This is because fixed rates are driven by Government of Canada bond yields — not directly by the Bank of Canada overnight rate.
What is happening with bond yields: 5-year Government of Canada bond yields have increased by approximately 0.69 percentage points since late 2025 as global uncertainty and inflation expectations have pushed yields higher. Since lenders price fixed mortgages as a spread above bond yields, rising yields mean rising fixed rates.
What this means for fixed rate borrowers:
- Borrowers who locked in 5-year fixed rates in late 2024 or early 2025 got near-cycle lows
- Fixed rates available today are higher than they were 6 months ago
- The trend for fixed rates is modestly upward through 2026 unless bond yields pull back
Who is most affected: Fixed-rate borrowers coming up for renewal in 2026 who originally locked in during 2021 at rates of 2%-3% will face renewal rates of 4.5%-5.5% — an increase of approximately $375-600 per month on a $500,000 mortgage balance. This is the single biggest mortgage affordability challenge in Canada right now.
Variable mortgage rates in 2026 — stable but at risk
Variable rates are tied directly to the Bank of Canada prime rate which sits at 4.45% as of mid-2026. Since the Bank has held steady, variable rates have been stable.
Current variable rate landscape: Most variable rate mortgages are priced at Prime minus a discount — currently in the range of Prime - 0.50% to Prime - 1.00%, putting effective rates at approximately 3.45% to 3.95% for qualified borrowers.
The variable rate risk in 2026: If Scotiabank and National Bank are right that the Bank of Canada could raise rates by 0.25%-0.50% later in 2026, variable rate holders would see their payments increase immediately. On a $500,000 mortgage a 0.25% rate increase adds approximately $104 per month.
Who should consider variable in 2026: Variable rates currently offer a lower starting rate than fixed, which helps with affordability and stress test qualification. Borrowers who believe rates will remain stable or fall — or who may need to break their mortgage early (lower penalty) — may prefer variable in the current environment.
Fixed vs variable — which makes more sense in 2026?
This is the most common question Canadian borrowers are asking right now. Here is an honest assessment. For a deeper comparison, see our fixed vs variable mortgage guide.
The case for fixed in 2026
- Rates could rise if inflation proves sticky — locking in today's rate provides certainty
- Fixed rates are relatively attractive compared to the 2022-2023 peak
- If you are renewing from a very low pandemic-era rate the payment shock is real — knowing exactly what you will pay has value
- Most financial advisors recommend fixed for borrowers with tight budgets
The case for variable in 2026
- Variable rates are currently 0.50%-1.00% below comparable fixed rates
- The Bank of Canada is more likely to hold or cut than to hike aggressively
- Lower penalty if you need to break your mortgage early
- If rates stay flat for 2 years the variable borrower comes out ahead
Our honest assessment
In the current environment both choices are defensible. The spread between fixed and variable (0.50%-1.00%) is not large enough to make variable a clear winner, but it is meaningful enough to be worth considering for financially stable borrowers. The decision should be based on your personal risk tolerance, budget flexibility, and likelihood of breaking the mortgage early.
The 2026 mortgage renewal crisis — what borrowers face
This is the most important mortgage story in Canada in 2026. Approximately 1.2 million Canadian mortgages are coming up for renewal in 2026. The majority of these are 5-year fixed mortgages taken out in 2021 when rates were at historic lows of 1.5%-2.5%.
What renewal holders are facing:
- Original rate: approximately 1.75%-2.25%
- Renewal rate today: approximately 4.59%-5.19%
- Payment increase on $500,000 balance: approximately $500-700 per month
- Annual additional cost: approximately $6,000-$8,400
According to CMHC data 35% of renewers in 2026 report experiencing increased financial pressure due to higher rates. This is a significant stress on household budgets across Canada.
What renewal borrowers should do: Start shopping for renewal rates 6 months before your maturity date. Use a mortgage broker to get competing offers from multiple lenders. Do not simply sign your current lender's posted renewal rate — you can almost always negotiate or find better rates elsewhere. See our full mortgage renewal guide for the negotiation playbook.
What falling rates mean for home buyers
For Canadians waiting on the sidelines hoping for rates to fall significantly before buying, the 2026 forecast brings mixed news.
The reality: Rates are unlikely to fall meaningfully further in 2026. The Bank of Canada has signalled rates are in the neutral zone and the next move may actually be upward if inflation rises. The dramatic cuts of 2024-2025 are likely over.
The risk of waiting: If you are waiting for 3%-4% mortgage rates to return, most economists and forecasters believe this is unlikely in the near term. Meanwhile home prices in some markets may rise when rate stability encourages more buyers back into the market.
The opportunity: Today's rates — while higher than the pandemic lows — are historically normal. The average 5-year fixed rate over the past 25 years in Canada is approximately 5%. Rates at 4.5%-5.5% are not abnormally high by historical standards.
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Try the AnalyzerFrequently asked questions
Will Canadian mortgage rates go down in 2026?
Most major bank forecasters expect the Bank of Canada to hold its rate at 2.25% for the remainder of 2026. A significant rate cut is unlikely unless the economy weakens sharply. Variable rates are expected to remain stable. Fixed rates may drift modestly higher as bond yields rise.
What is the best mortgage rate available in Canada in 2026?
The best available rates change daily. As of mid-2026 the best 5-year fixed rates available through mortgage brokers are in the 4.59%-4.79% range and the best variable rates are in the 3.45%-3.70% range. Always compare rates from multiple lenders or use a mortgage broker to access the full market.
Should I lock in a fixed rate now or wait for rates to fall?
Most forecasters do not expect significant rate decreases in 2026. If you are renewing or purchasing and rates are acceptable for your budget today, locking in provides certainty. Waiting for significantly lower rates carries the risk that rates stay flat or rise instead.
How does the Bank of Canada rate affect my mortgage?
The Bank of Canada overnight rate directly affects variable mortgage rates — when it rises or falls, your variable rate moves by the same amount within days. Fixed rates are not directly tied to the overnight rate — they are influenced by Government of Canada bond yields which move based on market expectations of future rates and inflation.
What is the stress test rate in 2026?
The stress test requires you to qualify at your actual contract rate plus 2% or 5.25% minimum — whichever is higher. With current contract rates of 4.59%-5.19%, the stress test rate is approximately 6.59%-7.19% for most borrowers in 2026.
Are mortgage rates higher in 2026 than 2025?
Fixed rates are modestly higher in mid-2026 than they were in late 2025 as bond yields have risen. Variable rates are essentially unchanged since the Bank of Canada has held its rate steady. Both are significantly lower than the 2023 peak when the 5-year fixed rate reached 6%+ at many lenders.
Mortgage rate forecasts are based on current market conditions and expert analysis as of June 2026. Rates change daily. Always confirm current rates with a licensed mortgage broker before making decisions. Forecasts are not guarantees.