On December 10, 2025, the Bank of Canada announced it will maintain its key interest rate at 2.25%. For many Canadian households, this signals a continued period of stable borrowing costs, welcome news for homeowners with variable-rate mortgages or those approaching renewal.
Why Was the Rate Held?
The Bank’s decision reflects a balancing act: Inflation is easing and nearing the 2% target, but some sectors of the economy remain sensitive to interest rates. A recent bump in GDP growth and lower-than-expected inflation suggest the Bank’s monetary tightening over the past two years is working.
While inflation dipped to 2.2% in October, the Bank noted that core inflation (which excludes volatile items like gas and food) remains closer to 2.5%. This means prices are stabilizing, but not enough to guarantee rate cuts in the immediate future.
What Does This Mean for You?
- Variable-rate mortgage holders will not see any changes in their monthly payments at this time.
- Fixed-rate mortgages are influenced by bond markets, not the Bank’s rate directly. Recently, bond yields have fluctuated, meaning fixed rates could still move independently.
- If you’re approaching renewal and currently locked into a rate above 5%, this is a good time to review your options. A refinance might reduce your payments or allow you to consolidate debt under a lower rate.
Looking Ahead
The next Bank of Canada rate decision will be on January 28, 2026. In the meantime, now is the time to review your mortgage strategy and ensure you’re positioned to make the most of today’s interest rate environment.
Book your personalized strategy call here: 👉 www.chatwithlisareynolds.ca
