Published: December 4th, 2025 • Last Updated: December 12th, 2025
Author: Ross Taylor on AskRoss.ca

UPDATE: Bank of Canada holds the line at 2.25% – What does this mean for 2026?

On December 10th, 2025, the Bank of Canada held its overnight rate steady at 2.25%, no surprises there.

But make no mistake: this “no move” announcement speaks volumes. Combined with a red-hot November jobs report, the Bank is sending a clear message: rate cuts are off the table for now, and there’s even talk of a possible hike in 2026 if our economy continues to improve.

Here’s what you need to know:

• Inflation is close to normal. Prices are rising slowly, so the Bank of Canada doesn’t feel pressure to lower rates again.
• The job market is strong. Canada added 54,000 new jobs in November, and the unemployment rate dropped to 6.5%.
• Wages are still climbing. Average hourly wages climbed 3.6% year-over-year. Canadians are earning more money, which is good, but it can also keep inflation from falling further.
• The economy is holding steady. Despite trade-related volatility, Q3 growth surprised with a 2.6% gain, showing our economy still has legs.
• The Bank is staying put. Interest rates are staying where they are for now, but they very well could go up later in 2026.

What does this mean for your mortgage strategy in 2026?

If you were holding out hope for more rate relief in early 2026, it’s time to shift gears.We’ve likely hit the bottom of this rate cycle, and the risk of an upward move later in 2026 is growing.

Here’s what I recommend:

• Considering a purchase? Lock in a 3 or 5-year fixed rate now.
• Don’t wait for cuts that may not come. If you’re up for renewal, consider locking in sooner rather than later.
• Explore refinancing now if you’ve taken on more debt, cash flow has tightened, or you cannot afford your renewal rate.
• Rethink going for a variable-rate if you’re sensitive to payment changes. Flexibility is great, but not if you’re banking on rate drops that might not materialize.

The Bank’s next announcement is scheduled for January 28, 2026, and we’ll get a fresh Monetary Policy Report at the same time.

But based on today’s decision and November’s jobs report, it’s clear: 2026 won’t be the rate relief year many were hoping for.

Not sure what to do next? My team and I are here to help. We’ll walk you through your options, run the numbers, and put together a mortgage plan that fits your goals. Reach out to us.

Jump to a specific section in this article ↓↓

• Why are fixed mortgage rates on the rise again?
• When should I consider a variable rate mortgage?
• My take on fixed versus variable right now
• What is the Bank of Canada likely to do in December 2025?
• What would happen if the BoC rate holds or falls?
• How much will my mortgage go up in 2026?
• Why you should consider refinancing before your mortgage renewal
• Should I choose a fixed or variable mortgage in 2026?
• Are mortgage rates going up or down in 2026?
• What do the new mortgage rules mean for me?
• What does the prime rate outlook mean for variable-rate borrowers?
• How many Canadians will feel the pain of higher payments in 2026?
• What kind of mortgage should I get in 2026?
• Advice from Ross Taylor Mortgages: Why You Should Explore Refinancing Before Your Renewal
• List of all FAQs: Mortgage & Renewal Rates Forecast 2026 Canada

Why are fixed mortgage rates on the rise again?

Fixed mortgage rates are climbing again, and it has everything to do with bond markets.

By late November, five-year Canadian bond yields jumped sharply, rising from 2.70 percent to just over 3 percent in less than two weeks. That’s roughly a 35 to 40-basis-point spike, and lenders quickly adjusted their fixed-rate offers to match.

So even though the Bank of Canada has not raised its policy rate, fixed rates are still going up. This is starting to shift the fixed-versus-variable conversation once again.

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When should I consider a variable rate mortgage?

Variable rates may remain slightly more attractive in the short term, but their volatility makes them harder for many households to tolerate.

Consider a variable-rate if you need to qualify for a larger mortgage.

Because of the stress test, lenders must make sure you can afford your mortgage at the contract rate plus 2%.

That gives a variable rate an edge:

• A variable rate at 3.55% is stress-tested at 5.55%
• A fixed rate at 4.29% is stress-tested at 6.29%

That difference can mean a bigger mortgage approval, which matters if your purchase is close to your affordability limit.

This does not make variable the better choice for everyone, but it is an important factor to understand.

Consider a variable-rate if you have a high income and a flexible cash flow.

If your budget can handle some ups and downs in monthly payments, a variable rate may still save you money in the long run IF rates stay flat or drift lower again in 2026 & 2027.

Consider a variable-rate if you have a solid plan in place.

If you are watching rates closely and working with someone who can help you pivot if things change, a variable can offer short-term savings and flexibility.

My take on whether you should choose a fixed or variable right now

• Choose fixed if you want stability and predictable monthly payments.
• Consider variable if you are financially flexible and comfortable with some short-term risk.
• The rate gap between fixed and variable is not large right now, so your personal comfort should drive your decision.

If you are unsure which direction to go, let’s talk through your numbers.

As always, if you have any questions, reach out to us. Our team will get you the best possible results for you and your situation.

Continue reading for my 2026 Mortgage Rates Forecast ↓↓

Forecast For Renewals, Refinancing, and Housing Affordability in 2026

The Bank of Canada’s next rate announcement is on December 10th, and while some had hoped for one last cut, that’s looking increasingly unlikely.

With the policy rate now sitting at 2.25% after a series of gradual reductions, and inflation cooling closer to the Bank’s target, most signs point to a pause, not another move down.

In short, the heavy lifting on rate cuts is likely done.

And that means borrowers need to shift their thinking from “how low will rates go?” to “what does this mean for me in 2026?”

Because here’s the reality: this isn’t just about what happens on one day in December.

It’s about what’s coming for millions of Canadian homeowners in the year ahead.

• Families are renewing into much higher mortgage payments.
• First-time buyers are trying to jump in before affordability tightens again.
• Homeowners are weighing whether now is the time to refinance or ride it out.

So let’s unpack what’s likely ahead for mortgage rates in 2026, and what that could mean for your next renewal, refinancing strategy, and overall homeownership budget.

What is the Bank of Canada likely to do in December 2025?

We’ve already seen three rate cuts since 2025, and now inflation seems to be moderating.

But on December 10th, 2025, the Bank of Canada is expected to either hold its overnight rate steady at 2.25% or possibly cut one final time to 2.00%.

Most of the big banks, RBC, TD, CIBC, National Bank and Scotiabank, think we’ve reached the floor.

This announcement is less about what happens that day and more about setting expectations for 2026.

What would happen if the BoC rate holds or falls?

• If the Bank pauses at 2.25%, it signals that the rate cuts are over, and we may be looking at stability, or even increases, later in 2026.
• If the Bank cuts to 2.00%, borrowers might get one last gasp of lower rates in early 2026 before the next tightening cycle begins.

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How much will my mortgage go up in 2026?

Let’s talk about what’s really keeping Canadians up at night: renewals.

The Bank of Canada analysis suggests that many borrowers renewing in 2026 will see 15-20% higher payments at renewal.

And around 60% of Canadians renewing their mortgages in 2025 and 2026 will see an increase in their payments.

The biggest shock will hit those coming off five-year fixed rates locked in around 2.5–3.0% during the pandemic.

These folks are staring down new rates in the 4.4–4.8% range.

Payment shock example

Let’s say a household has a $500,000 mortgage with 20 years remaining when it renews in 2026.

• At a pandemic-era rate of 2.5%, their monthly payment would be about $2,650.
• If they renew at a new rate of 4.5%, the payment jumps to roughly $3,150 per month.
• That’s an increase of about $500 per month, or $6,000 per year, a near-20% jump in mortgage payments.

That means more of your income is going toward your mortgage, and less is left for everything else, groceries, gas, savings, and RRSP contributions.

It’s a household budget squeeze that’s only going to get tighter in the second half of 2026.

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Why you should consider refinancing before your mortgage renewal

If your mortgage is up for renewal in the next 6 to 18 months, refinancing now could save you thousands.

Refinancing is not just about securing a better rate; it’s about giving yourself breathing room.

With rates still hovering near their expected bottom, your window to act is limited.

Why refinancing makes sense

• Lock in today’s lower rates before projected increases.
• Consolidate high-interest debt into your mortgage.
• Access home equity for renovations, investments, or cash flow.
• Switch to a more flexible term that fits your finances.

If your situation has changed since you got your current mortgage, refinancing gives you a chance to realign your financing with your goals.

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Should I choose a fixed or variable mortgage in 2026?

This is probably the most common question I get right now.

There’s a real divergence forming between fixed and variable mortgage paths.

Here’s how to think about your options in 2026

Lock in a fixed rate if:

• Your mortgage is renewing in early 2026.
• You want certainty in your monthly payments.
• You believe rates will rise in the second half of the year.

Consider a variable rate if:

• You’re financially flexible.
• Your renewal date is late 2026 or beyond.
• You believe the BoC will hold or cut again.

We’re likely sitting at the bottom of the rate cycle, and the risk of upward movement later in 2026 is real.

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Are mortgage rates going up or down in 2026?

In early 2026, rates may still be relatively low.

But the consensus is clear: rates are going up again by mid-to-late 2026.

Forecasts for 5-year fixed rates:

• Early 2026: ~4.4%
• Mid-to-late 2026: 4.8–5.2%

Even a 0.5% increase can add tens of thousands of dollars in interest over a 25-year mortgage.

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What do the new mortgage rules mean for me?

In 2024, federal reforms introduced 30-year insured mortgages for eligible first-time buyers and relaxed stress-test requirements for certain switches at renewal.

30-year insured mortgages now available for first-time buyers

• 30-year amortizations are now available for insured mortgages on eligible new builds.
• Applies to purchases up to approximately $1.5 million, subject to down payment rules and program guidelines.
• Monthly payments are lower, which can make qualifying easier and reduce financial pressure.
• Total interest paid over time will be higher, but for many buyers, the immediate affordability benefit outweighs that.

While these give borrowers more flexibility, they don’t remove qualification requirements.

It’s now easier to switch lenders at renewal

Another key update affects renewing homeowners who want to shop around:

• Uninsured borrowers can now switch lenders at renewal without redoing the stress test
• Applies only to “straight switches”, same mortgage balance and remaining amortization.
• Makes it easier to leave your current lender if they’re not offering competitive terms.
• Stress test still applies if you’re increasing your mortgage or refinancing.

This change gives homeowners real negotiating power at renewal, and for many, it’s the first chance in years to break free from their lender’s renewal offer and secure a better deal with better terms.

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What does the prime rate outlook mean for variable-rate borrowers?

The prime rate directly impacts variable mortgage rates.

Where the prime rate is heading:

• Current prime (Dec 2025): 4.45%
• Early 2026: Could dip to 4.20%
• Late 2026: Climbing toward 4.60–4.80%

Variable-rate borrowers may see payments increase in Q3 or Q4 2026, even after some early-year relief.

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How many Canadians will feel the pain of higher payments in 2026?

The short answer? Millions.

• 60% of mortgages are renewing in 2025–2026.
• Around 2.1 to 2.4 million households are affected.
• Worst-hit: Those who bought between 2020–2022 with low rates.

This would be one of the largest waves of renewal-related payment shocks in Canadian history.

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What kind of mortgage should I get in 2026?

There’s no one-size-fits-all answer. Here’s a quick guide:

Here’s my 2026 mortgage strategy cheat sheet

IF THIS IS YOUR SITUATION	WHAT YOU SHOULD DO
If your financial situation has changed (more debt, need cash flow)	Refinance early to consolidate debt, access equity, or adjust your amortization for breathing room
If your mortgage is renewing in early 2026	Lock in a 5-year fixed before expected mid-year increases
If you're renewing mid-to-late 2026	Consider a 1- or 2-year fixed to stay flexible and reassess in 2027; you'll have more data from the BoC to work with.
If you're feeling financially vulnerable	Choose a fixed rate for certainty and budget control
If you have a high income and flexibility	Explore variable options, but monitor rate trends closely

Most importantly, work with a broker that understands your situation. We have helped thousands of Canadians across the country. Reach out to us at 416-989-1000 or email us any questions you may have at [email protected]

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Advice from Ross Taylor Mortgages: Why You Should Explore Refinancing Before Your Renewal

We’re heading into a year of change, and it’s going to affect millions of households. Let’s make sure you’re one of the Canadians who come out ahead.

If you’re staring down a 2026 renewal, now is the time to talk about refinancing.

Even if it’s 6–12 months away, you may be able to refinance early and secure a better rate.

Here’s my advice:

• Don’t wait for your lender’s offer.
• Start reviewing options 4–6 months before renewal.
• Consider refinancing if you have high-interest debt.
• Use CMHC’s new flexibility to your advantage. The removal of stress tests for switches and expanded 30-year mortgages gives more room to make better moves for YOU.
• Protect your future self. A little work now can save you years of financial stress later.

If you want to explore your options or just get a sense of what your 2026 renewal will look like, let’s connect. A quick conversation now could mean real savings for you and your family.

Because when it comes to your mortgage, waiting until the last minute could be the most expensive choice of all.

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List of all FAQs: Mortgage & Renewal Rates Forecast 2026 Canada

What is the Bank of Canada likely to do in December 2025?

• The Bank is expected to hold its overnight rate at 2.25% or possibly make one final cut to 2.00%, signalling the likely end of rate reductions.

What would happen if the BoC rate holds or falls?

• A rate hold implies stability or future increases, while a cut to 2.00% may offer a brief window of lower rates before another tightening cycle begins.

How much will my mortgage go up in 2026?

• Most borrowers will see a 15-20% increase in payments, with those renewing from pandemic-era rates facing the steepest hikes.

What is an example of a mortgage payment shock in 2026?

• A $500,000 mortgage could jump from $2,650 to $3,150 per month, an increase of $500 monthly or $6,000 annually.

Why should I consider refinancing before my mortgage renewal?

• Refinancing can lock in lower rates, consolidate high-interest debt, improve cash flow, and help avoid payment shock later.

When is the best time to refinance if my mortgage is renewing in 2026?

• Ideally, 4–6 months before your renewal date, while rates remain relatively low.

Should I choose a fixed or variable mortgage in 2026?

• Choose fixed if you want payment certainty and expect rates to rise. Consider variable only if you’re financially flexible and renewing later in 2026.

Are mortgage rates expected to go up or down in 2026?

• Rates may remain low early in 2026, but most forecasts expect them to rise by mid-to-late 2026.

What are the forecasts for 5-year fixed rates in 2026?

• Around 4.4% in early 2026, rising to 4.8–5.2% by the second half of the year.

What are the new mortgage rules introduced for 2026?

• New rules include 30-year insured amortizations for first-time buyers and relaxed stress tests for certain mortgage renewals and switches.

What does the prime rate outlook mean for variable-rate borrowers?

• The prime rate may dip slightly in early 2026 but is expected to rise again later, affecting monthly payments for variable-rate mortgages.

How many Canadians will be affected by mortgage payment increases in 2026?

• Around 2.1 to 2.4 million households, especially those renewing from ultra-low pandemic-era rates.

What kind of mortgage should I get in 2026?

• Fixed is safest for most, especially early in the year. Short-term fixed or variable may work for flexible borrowers renewing later in the year.

What refinancing advice does Ross Taylor Mortgages offer?

• Don’t wait for your lender’s offer; start early, use new CMHC flexibility, and explore refinancing options that match your financial goals.

What happens if I wait too long to refinance or renew?

• You risk missing lower rates and may face higher payments that strain your household budget.

How can I prepare for a mortgage renewal in Canada in 2026?

• Start planning 4–6 months ahead, compare lender offers, consider refinancing, and assess your household budget.

Will inflation affect Canadian mortgage rates in 2026?

• Yes, if inflation rises, the BoC may increase rates to control it, which will push mortgage rates higher.

Can I switch mortgage lenders without penalties in 2026?

• Yes, especially with new rules easing stress tests for switches, but check your current mortgage terms for any fees.

Is it better to renew or refinance my mortgage in 2026?

• Refinancing may offer flexibility and savings if done early, while renewing might limit options if you wait too long.

How do rising rates affect mortgage affordability in Canada?

• Higher rates mean higher monthly payments, reducing how much home you can afford without exceeding your budget.
  

Can I refinance if I have high debt or poor credit in 2026?

• It’s possible if you have sufficient home equity, especially with guidance from a broker who understands alternative lending.

Will mortgage rates ever go back to pandemic-era lows?

• Unlikely in the near term, as those were emergency-level rates. Future rates are expected to remain higher than 2020–2021 levels.
  

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