No Change to Variable Rate yet again!

Today, the Bank of Canada announced that it is NOT changing interest rates.

• The overnight rate remains at 2.25%

• The prime rate stays at 4.45%

What does this mean for you?

This decision affects variable and adjustable rate mortgages, as well as lines of credit. It does not affect fixed-rate mortgages at this time.

How this impacts different products

• Home Equity Line of Credit (HELOC): HELOCs are typically priced at Prime + 0.50%, keeping the current rate at 4.95%.

• Variable / Adjustable Rate Mortgages: These are usually priced between Prime – 0.50% and Prime – 1.10%, meaning current rates range from 3.35% to 3.95%.

What is the Bank of Canada overnight rate?

The overnight rate is the interest rate major banks use to lend money to each other overnight.The Bank of Canada sets this key rate to help manage the economy:

• They may lower it to encourage borrowing and spending

• They may raise it to help control inflation and debt

When the overnight rate changes, lenders usually adjust their prime rate, which is used to set rates for mortgages, loans, and lines of credit.

Fixed vs. Variable Rates

• Variable rates can change when the prime rate changes

• Fixed rates stay the same for the full term and are only affected at renewal

Should you lock into a fixed rate?

Historically, variable rates have tended to save borrowers more money over the long term.Before switching to a fixed rate, consider the following:

• Are you planning to sell your home soon? If so, staying variable is often the better option.

• Can your budget handle potential payment increases if rates rise?

• Do you plan to make extra payments? Lower variable rates can help you pay off your mortgage faster.

If you’re thinking about locking in, we recommend chatting with us first. We have a handy calculator that can help forecast your potential savings and determine the best option for you.

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Whats to come??

Source: First National - one of Canada's largest non-bank mortgage lenders, offering both commercial mortgages and residential mortgage solutions.

For the seventh time in a row, Canada’s central bank has opted to maintain its overnight policy interest rate at 2.25%, unchanged since October of 2025.

This decision was widely anticipated, but as always, the Bank provided new insights into its thinking and updated its economic and market outlook.

We capture the BoC’s comments from its September 2, 2026 report below.

Canadian Economic Performance and Outlook

• Canadian economic activity strengthened in the second quarter, with GDP up by 3.3%, following very weak growth in the first quarter

• While some of the recent strength reflected temporary factors, the pick-up in activity was broad-based and consumption “showed solid gains”

• Exports and business investment were up sharply

Inflation

• CPI inflation has been hovering around 3% in recent months, mainly because of persistently higher gasoline prices

• So far, there has been little evidence of higher energy prices spreading to other components of inflation

• Excluding gasoline, inflation was 2.2% and measures of core inflation remained close to 2% in July

Canadian housing and employment

• Following several weak quarters, there was “some rebound” in housing activity

• Labour market conditions have improved in recent months, with the unemployment rate edging down to 6.4% in July

• Still, demand for labour remains subdued and indicators point to continued excess supply in the economy

Global economic commentary

• In the United States, economic growth continues to be solid, driven by consumer spending and Artificial Intelligence (AI)-related investment

• Growth in the euro area was stronger than expected in the second quarter, while China’s economy slowed

• Overall, the global economy has shown resilience in the face of geopolitical headwinds, with growth broadly consistent with the Bank’s July Monetary Policy Report (MPR) projection

• With still-high oil prices and elevated margins for refined energy products, inflation in most countries remains high

Financial conditions and bond yields

• Financial conditions have tightened since July

• Long-term bond yields have moved up globally, including in Canada

• The Canadian dollar has appreciated slightly on US-dollar weakness

Special mentions

In its statement, the Bank made special mentions of the continuing conflict in the Middle East (which it observes is keeping energy prices high), as well the breakdown of trade talks between Canada and the United States (which has led to new US tariffs and Canadian counter-tariff measures). The Bank described both situations as “fluid.”

The Bank also noted that recent data “reaffirm” its view of a broadening recovery in Canada’s economy. However, the BoC also acknowledged that uncertainty is high and new US tariffs and threats of further action pose risks to the sustainability of the recovery.

Furthermore, the BoC offered that: “With the Middle East conflict still ongoing and little progress reopening the Strait of Hormuz, upside risks to the Bank’s inflation forecast have increased.” Indeed, the Bank said “the longer that high oil prices and elevated refinery margins persist, the greater the risk of spillover to the prices of other goods and services.” New US tariffs and Canadian counter-tariffs will also raise costs for some businesses and could feed into consumer prices over time.

The Bank’s outlook

The Bank noted that with the economy and inflation evolving broadly as forecast, it decided to leave its policy interest rate unchanged. However, as noted above, it also acknowledged that the “upside risks” to inflation have increased, while new tariffs make growth prospects more uncertain. Consequently, the Bank said that its Governing Council will assess the sustainability of the economic rebound and the outlook for inflation, and “is prepared to adjust monetary policy as needed.”

The Bank finished its statement by reminding Canadians that it remains committed to maintaining our confidence in price stability through this “period of global upheaval.”

Stay Tuned

Next Schedule Interest Rate announcements will be October, 28th 2026