Canadian Mortgage Rate Forecast 2026–2030

Most economists expect at least one more Bank of Canada rate cut in 2026. The overnight rate is currently 2.75% after a 25bp cut in January 2026. I expect one more cut to 2.50% by mid-2026 before the BoC pauses. However, US tariff uncertainty and a weak Canadian dollar could delay further action.

Variable mortgage rates are likely to decline slightly if the BoC cuts again in 2026. Fixed rates depend on bond yields, which have been relatively stable. I expect the best 5-year fixed rates to remain in the 3.39% to 3.99% range through 2026. Overall, rates are trending modestly lower, but the pace of decline has slowed significantly.

The Canadian prime rate is currently 4.45%, effective since the Bank of Canada's January 29, 2026 cut to 2.75%. Prime rate is set by individual banks but typically moves in lockstep with the BoC overnight rate. Variable mortgage rates are expressed as prime minus a discount (e.g., prime minus 1.11%).

It depends on your risk tolerance and financial situation. If further BoC cuts materialize, variable rate borrowers will benefit more. However, fixed rates offer certainty. I recommend variable for those comfortable with payment fluctuations and 3-year fixed for a middle-ground approach. The 5-year fixed at 3.69% is also attractive by historical standards.

Based on current economic projections, I expect 5-year fixed mortgage rates to settle in the 3.19% to 4.49% range by 2030, with the BoC overnight rate between 2.25% and 3.50%. These are forecasts, not guarantees — unexpected events like the 2020 pandemic or 2022 inflation surge can dramatically shift the outlook.

When the BoC changes its overnight rate, variable mortgage rates move by the same amount within days. For example, a 25bp cut lowers your variable rate by 0.25%, saving about $90/month on a $700,000 mortgage. Fixed rates are influenced by bond yields, which often move in anticipation of BoC decisions but are not directly tied to them.

The stress test rate is the higher of your contract rate plus 2% or the qualifying rate floor of 5.25%. For a contract rate of 3.69%, you must qualify at 5.69%. This means you need sufficient income to handle payments at the stress test rate, even though your actual payments will be lower.

In February 2026, variable rates offer a 0.35% discount over 5-year fixed and could widen if the BoC cuts again. I lean toward variable for borrowers with a stable income and emergency fund, and 3-year fixed for those who want certainty with a shorter commitment. Run the numbers using my mortgage affordability calculator to see the actual monthly difference.

The next scheduled Bank of Canada interest rate announcement is March 12, 2026. There are 8 scheduled announcement dates per year: January 29, March 12, April 16, June 4, July 15, September 17, October 28, and December 10. I update this page after each decision.

If the BoC raises rates, your variable mortgage rate increases by the same amount. With most variable-rate mortgages, your payment stays the same but more goes to interest and less to principal. Some lenders have trigger rates — if your rate rises enough that payments no longer cover the interest, your lender may increase your payment. Check with your lender about your trigger rate.