Canada's Mortgage Rate Forecast: Stability Ahead, but Higher Payments Loom for Many Borrowers

Canada's mortgage rate forecast for 2026 suggests borrowing costs will remain relatively stable. The Bank of Canada (BoC) is expected to hold the policy interest rate at 2.25% throughout the year, resulting in variable mortgage rates remaining unchanged and fixed rates possibly increasing slightly in line with Government of Canada (GoC) bond yields.

According to recent data, approximately 33% of Canadian mortgage holders are expected to face higher monthly mortgage payments by the end of 2026. Of these borrowers, those with 5-year fixed-rate mortgages will see payment increases averaging around 20%. Variable mortgage rates may experience significant changes in their mortgage payments, with 10% of borrowers renewing a variable-rate mortgage projected to see payments rise by more than 40%, while 25% could see their payments fall by at least 7%.

The Bank of Canada's policy rate forecast suggests that the overnight policy rate will remain stable at 2.25% for much of the year, with most major banks predicting rates will end the year at the same level as they began. Government of Canada 5-year bond yields are expected to rise from a low near 3% early in the year to around 3.25% by the end of 2026.