No Change - Variable Rates Hold Firm

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 fifth time in a row, Canada’s central bank has opted to maintain its overnight policy interest rate at 2.25%. This hold-the-line stance was widely anticipated although recent economic data continues to fuel speculation about what comes next for rates and when.

To understand the Bank’s perspective on this key topic, we summarize its June 10th, 2026 observations and outlook below.

Canadian economic performance and outlook

• GDP edged down by 0.1% in the first quarter, weaker than expected at the time of the Bank’s April Monetary Policy Report

• Consumer spending grew 1.4% but government spending “unexpectedly declined”

• Business investment remained weak

• Exports fell while imports rose strongly as inventories were rebuilt

Inflation

• Reflecting the Bank’s previous expectations, Consumer Price Index (CPI) inflation rose in April, reaching 2.8%

• The increase reflects energy prices, both higher oil prices and the impact of the elimination of the consumer carbon tax falling out of the 12-month rate of inflation

• So far, there has been limited evidence of broad-based pass-through of higher energy prices to other consumer prices

• Measures of core inflation have moved down to around 2% and the share of CPI components growing above 3% is close to its historical average

• Food price inflation moderated but remains high

• With global oil prices still elevated – roughly $10 a barrel above the Bank’s April MPR assumptions – total inflation is expected to hover around 3% in the near term before easing gradually towards 2%

Canadian housing and employment

• Housing activity declined and shelter inflation continued to slow

• Employment was up in May, but looking through monthly volatility, employment in Canada is little changed since the start of the year

• The unemployment rate continues to fluctuate in the 6.5% to 7% range with the most recent reading at 6.6% in May

Global economic commentary

• The conflict in the Middle East is now in its fourth month, and the resulting increases in energy prices and disruptions in global supply chains are weighing on global economic growth and pushing up inflation

• At the same time, the US administration continues to propose new tariffs and trade policy uncertainty remains elevated

• In the United States, economic growth remains solid, supported by consumption and AI related investment

• In the euro area, growth is subdued, with higher energy prices weighing on activity

• China’s economic growth continues to be supported by strong exports

Financial conditions and bond yields

• Canadian financial conditions have loosened since the April Monetary Policy Report

• Global equity markets have been buoyant and bond yields remain volatile

• The Canadian dollar has weakened against the US dollar and other currencies

The Bank’s outlook

In commenting on its decision to hold its policy rate steady, the BoC offered that “recent data suggests that growth will resume in the second quarter but, even with some rebound, the economy is expected to remain in excess supply.”

Taking in all of this data and “against this overall backdrop,” the Bank’s Governing Council “decided to maintain the policy rate at 2.25%.”

The Bank said its analysis shows that economic activity in Canada has been weak “and uncertainty about US trade policy persists.” It further stated that the conflict in the Middle East is ongoing and oil prices remain elevated. That said, “Governing Council is continuing to look through the war’s near-term impact on headline inflation but will not let higher energy prices become persistent inflation.”

As the Bank’s outlook evolves, it noted that it stands ready to respond “as needed.” The Bank’s statement concluded with its commitment to maintain Canadians’ confidence in price stability “through this period of global upheaval.”

Stay Tuned

Next Schedule Interest Rate announcements will be July 15th, 2026