Canadian Mortgage Market 2026: First Quarter State of Play

The overnight rate has moved from 0.25% to 5.00% and back to 2.25% since the pandemic began. Each phase has affected how Canadians borrow, buy and refinance.21 This article is a snapshot of the market as of March 2026. It has been updated on 2026-10-05 to add the Bank of Canada decision of September 2, 2026.

The overnight rate has been 2.25% since October 29, 2025, and it was still 2.25% at the September 2, 2026 decision.35 For many Ontario borrowers, the useful question is less what the Bank will do next and more what their own renewal, purchase or refinance should look like.

The Bank of Canada Has Held Since October 2025

On March 18, 2026, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.50% and the deposit rate at 2.20%.4 The target was also 2.25% at the September 2, 2026 decision.5

Two March 2026 indicators: the unemployment rate was 6.7%, unchanged from February.6 Headline consumer price inflation was 2.4% year over year.7 Each decision is made on the data available at the time, so the rate can change in either direction as new data arrives.

No one can say for certain when the Bank will next change its target. Forecasts for the policy rate have been wrong before, in both directions.

Fixed Rates Can Move Without the Bank

Fixed mortgage rates do not follow the overnight rate directly. They track Government of Canada bond yields, which reflect expectations about future interest rates, inflation and economic growth. A fixed rate can rise even while the Bank holds, and it can fall while the Bank is still on hold.

Variable rates are usually tied to a lender's prime rate. Banks adjust prime when the Bank of Canada changes its target rate, so variable rates move less often than fixed rates.

Lenders change their posted rates often, and this article does not quote current lender rates. For a current quote, speak with a licensed mortgage professional. Quotes are subject to approval. OAC. Rates subject to change. Conditions apply.

Bank of Canada Rates

Sources: 4 5. These are Bank of Canada rates, not mortgage rates. Mortgage rates are set by lenders and are not shown here.

Local Markets

Housing conditions differ a great deal by city, property type and neighbourhood. For national average prices, the Canadian Real Estate Association publishes monthly statistics.8 For Greater Toronto Area figures, check the monthly market statistics published by the Toronto Regional Real Estate Board. This article does not give local price figures, because the figures change each month.

The Rate Path Since 2020

The table below shows the overnight rate at selected points since March 2020, taken from Bank of Canada decisions.191011

The rate path has changed direction several times since 2020. Forecasts have been wrong in both directions over this period, so it is better to plan for a range of outcomes than for one expected rate.

An Illustrative Example

Example: a renewal at 25 years remaining. Assume a borrower has $400,000 owing with 25 years of amortization left at renewal. For illustration only, this example uses a 4.39% fixed rate for five years. It is not a rate quote. On semi-annual compounding, the monthly principal and interest payment would be about $2,190, before any fees, insurance or penalty. Compare offers on total cost over the term, not only on the monthly payment, because a lower payment over a longer amortization can cost more in total.

* Real names have been replaced with fictional names. This case is illustrative.

Practical Steps

These are general points, not advice for your situation:

1. If your renewal is coming up: Ask your lender or a licensed broker whether a rate hold is available and on what terms. Rate holds vary by lender and can have an expiry date and conditions. Compare the offer with at least one other lender before you sign.
2. If you are buying: Market conditions vary by city and property type. Get the terms of any pre-approval in writing, and have a lawyer review the conditions in any offer.
3. Fixed versus variable: Neither choice suits everyone. Compare the payment on each, the penalty for breaking each term, and how much of a payment increase your budget could absorb. Discuss the choice with a licensed mortgage professional.
4. If you are on a variable rate: Work out how a rate increase would affect your budget before deciding whether to lock in. A fixed rate has its own costs, including penalties if you break the term early.
5. If you are in a private mortgage: Private mortgages are often used as a short-term bridge. Talk to a licensed broker about the options for your situation, including the cost of staying in the loan and the cost of exiting it. Those costs depend on your file.

Planning ahead and comparing options before you decide usually helps.