Sep 2, 2026
The Bank of Canada (BoC) isn’t giving Canadian borrowers the news many were hoping for — but it is doing exactly what analysts predicted. On September 2, Canada’s central bank held its overnight rate at 2.25% for a seventh straight decision — the level it’s held since cutting from 2.50% in October 2025.
For Canadians whose mortgages come up for renewal this year, that hold means no relief from a payment shock that’s already landed. Homeowners who recently renewed are absorbing an average of $375 more a month, according to the Canada Mortgage and Housing Corporation (CMHC) — and the central bank just signalled it isn’t in a hurry to bring rates down further.
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Worse, the Bank flagged new risks that could push inflation higher, driven largely by tariffs and elevated oil prices tied to the conflict in the Middle East. A steady rate paired with rising inflation risk is exactly the kind of environment where mortgage and interest rate relief gets pushed further down the priority list.
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What the Bank of Canada actually decided
The Bank left its overnight rate unchanged at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. BoC commentary pointed to a stronger-than-expected economy as reasons for a continued hold. The BoC’s decision came fresh off of the latest gross domestic product (GDP) numbers, which grew 3.3% in the second quarter of 2026, and unemployment edged down to 6.4% in July.
But the BoC also warned that new US tariffs and Canadian counter-tariffs, as well as elevated oil prices, are raising the risk that inflation moves higher rather than settling near the Bank’s 2% target. Canada’s Consumer Price Index has hovered around 3% recently, largely because of gasoline prices, though core inflation remains closer to 2%.
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Why the hold doesn’t mean relief is coming
It’s tempting to read a rate hold as good news — at least rates aren’t rising. But the Bank’s language suggests the opposite risk is now more likely than a cut.
Governing Council said upside risks to inflation have increased, even as tariffs make growth prospects more uncertain — a signal it’s prepared to raise rates again if tariff-driven costs spread into everyday prices.
The next scheduled decision is October 28, 2026, alongside an updated Monetary Policy Report.
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Until then, fixed and variable mortgage rates are more likely to hold or creep higher than fall. CMHC’s latest housing outlook points to rising bond yields keeping fixed rates elevated, and expects variable rates to rise as the Bank normalizes policy through mid-2026.
What this means if your mortgage is renewing
The pain already shows in the data. In CMHC’s 2026 Mortgage Consumer Survey, homeowners who renewed in the past 18 months reported an average payment increase of $375 a month, and 35% said the change created real financial pressure on their budget.
Despite more dollars being spent on housing, there’s one positive outcome, according to CMHC data: The share of homeowners worried about making payments fell to 39% this year, down from 53% in 2025, as the worst of the pandemic-era renewal wave passes.
Still, cracks are showing. The national 90-day-plus mortgage delinquency rate rose to 0.24% in the fourth quarter of 2025, up from 0.21% a year earlier, with delinquencies in the Toronto area jumping 45% year over year. Those numbers remain low historically, but they’re moving the wrong way.
What savers and variable-rate holders should watch
A steady policy rate is welcome news for savers. GIC and high-interest savings rates tend to track the Bank’s overnight rate, so a hold means those returns aren’t shrinking for now.
Variable-rate mortgage holders and lines of credit tied to prime should see no immediate change either.
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But CMHC expects that calm to be temporary, flagging variable rates rising later this year as the Bank normalizes policy, even without a hike this week. Anyone counting on today’s variable rates through 2027 should build some cushion into their budget now.
What to do before October 28
Don’t wait for a rate cut that isn’t guaranteed. Get a rate hold from your lender now, since holds typically lock in a rate for 90 to 120 days even if rates move before renewal.
Compare at least one other lender before signing, since switching at maturity carries no penalty.
Stress-test your budget against a payment $300 to $400 higher than your current one, in line with what CMHC’s survey found renewers are already absorbing. If you’re on a variable rate, revisit your amortization and payment cushion before the Bank’s next decision.
The Bank of Canada didn’t make borrowing more expensive this week. But it didn’t make it cheaper, either. It told Canadians, in plain terms that the risks now tilt toward prices rising before rates come down — and this could even mean a rate hike in the not-so-distant future.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
