Bank of Canada Holds Key Rate at 2.25% — What It Means for Mortgage Holders and Buyers

On December 10, 2025, the Bank of Canada announced that it is maintaining its overnight policy rate at 2.25%. This decision was widely expected, reflecting strong economic growth, easing inflation, and a healthy labour market.

Why the Rate Hold?

• Strong economic momentum: Canada’s economy grew faster than expected in recent quarters.
• Cooling inflation: Consumer prices have eased into the Bank’s 1–3% target range.
• Vigorous job market: Employment gains and a lower unemployment rate signal resilience.

The Bank indicated that the current rate is “about the right level” and has shifted into a holding pattern for now.

Impact on Fixed-Rate Mortgages

• No immediate change: Fixed-rate mortgages are based on bond yields, not the overnight rate, so today’s announcement doesn’t affect your current payments.
• Renewal outlook: If your term is ending soon, expect renewal rates to remain similar to current levels. Slight increases are possible if bond yields rise.
• Predictability: Fixed-rate borrowers continue to enjoy stability and budgeting certainty.

Impact on Variable-Rate Mortgages and HELOCs

• Prime rate unchanged: Variable-rate mortgages and HELOCs tied to prime will stay the same.
• Short-term stability: No new hikes or cuts mean your payments remain steady.
• Future risk: If inflation trends upward again, rate hikes could return in late 2026, impacting variable-rate borrowers first.

What This Means for Homeowners and Buyers

For current fixed-rate holders, today’s hold means peace of mind.
 

Variable-rate borrowers benefit from stability for now but should stay alert for future changes.
 

New buyers should weigh predictability versus flexibility when choosing between fixed and variable options.

Mortgage Strategy Takeaways

1. Fixed-rate mortgages: Best for those who value certainty and want to avoid future volatility.
2. Variable-rate mortgages: Attractive for those comfortable with potential fluctuations and who can absorb changes if rates rise.

How Mortgage Brokers Ottawa Can Help

• Personalized advice: We help you choose the right mortgage type based on your goals and risk tolerance.
• Renewal planning: Compare fixed and variable options when your term ends.
• Market monitoring: Stay informed about rate trends and policy changes.

Bottom Line

The Bank of Canada’s decision to hold rates steady at 2.25% offers short-term stability. Fixed-rate borrowers remain unaffected, while variable-rate borrowers enjoy continued relief—but future hikes aren’t off the table. Whether you’re renewing or buying, working with a mortgage broker ensures you make the best decision for your financial future.