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Economic Viewpoint

Outlook for Mortgage Rates

Despite the Economic Uncertainty, the Odds of Another Monetary Policy Rate Cut Are Low

December 18, 2025
Hendrix Vachon
Principal Economist

The Bank of Canada (BoC) kept the policy interest rate at 2.25% last week, and it looks like we can expect it to hold steady for some time. In total, the Bank cut its rate by 100 basis points in 2025 after lowering it by 175 basis points in 2024. While there is still a great deal of economic uncertainty, it’s not enough to justify further monetary easing, and the BoC still considers inflation risks to be overly high. We expect mortgage rates to remain basically stable in 2026, after two years of sizeable cuts. The recent enthusiasm for variable rate mortgages may wane in 2026, especially if borrowers start anticipating new rate increases. Borrowers may still continue to prefer fixed rate mortgages with terms of less than 5 years.

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