The Bank of Canada maintained its overnight interest rate at its December 2025 meeting, citing "stronger-than-expected resilience" in the Canadian economy. For Ottawa homeowners and buyers heading into 2026, here's what that actually means — and what you should be doing about it.
Why the Bank Paused
After a series of rate cuts through 2024 and into 2025, the Bank of Canada hit the pause button in December. Recent economic indicators gave them reason to hold steady:
- GDP growth came in stronger than projected
- Employment remained stable
- Consumer spending held up despite higher borrowing costs
- Inflation remained within target ranges, reducing pressure for further cuts
The Bank also acknowledged ongoing risks — global trade disruptions, uneven domestic demand across sectors, and geopolitical tensions — as factors that warranted caution. In short: the economy is holding up well enough that rushing to cut further doesn't make sense right now.
What This Means if You Have a Variable-Rate Mortgage
No immediate change. Variable-rate mortgages and HELOCs track the Bank's overnight rate through the prime rate, so a hold means your payment stays exactly where it is. After the significant rate decreases of the past 18 months, this is a period of stability — and variable-rate holders who've been riding those cuts down are in a much better position than they were in 2023.
What This Means for Fixed-Rate Mortgages
This is where it gets more nuanced. Fixed mortgage rates don't move with the Bank of Canada's overnight rate — they're driven by Government of Canada bond yields, which respond to different economic signals including inflation expectations, global markets, and U.S. Federal Reserve policy.
Heading into December 2025, bond yields were rising, which puts upward pressure on fixed rates even when the overnight rate holds steady. If you're coming up on a renewal or planning to purchase in early 2026, this is worth paying attention to. Locking in a rate hold sooner rather than later — most lenders allow up to 120 days — can protect you if fixed rates tick higher.
A rate hold from the Bank of Canada doesn't mean your mortgage rate is frozen. Fixed rates can still move in either direction based on bond markets. Reviewing your options early is always the smarter play.
Recommendations for Ottawa Homeowners
- Renewal within the next 120 days? Start your review now. Locking in a rate hold costs nothing and protects you against increases while you evaluate your options.
- Planning to buy in early 2026? Get pre-approved so your rate is protected before you start shopping. Pre-approvals lock in current rates for 90–120 days.
- On a variable rate wondering whether to lock in? This depends on your specific rate, your remaining term, and your risk tolerance. There's no universal right answer — reach out for a personalized analysis.
The Bigger Picture Heading Into 2026
The Bank signaled what economists call a "neutral positioning" — meaning current rates are appropriate given economic conditions, and future adjustments will depend on how inflation and growth evolve. The next scheduled rate announcement provides the next opportunity for a change, but the December signal suggests the Bank is in no hurry.
For Ottawa buyers and homeowners, the practical takeaway is: rates are not going to zero, and they may not fall much further in the short term. Preparing your mortgage strategy based on today's environment — rather than waiting for further cuts — is the sensible approach.