Bank of Canada January 2026 Rate Announcement: Mortgage Impact

The Bank of Canada’s January 2026 rate announcement has set the tone for the Canadian mortgage market at the start of the year. With millions of homeowners renewing or shopping for mortgages in 2026, understanding how this decision affects borrowing costs is essential.

Here’s a clear breakdown of what the announcement means for fixed and variable mortgage rates, renewals, and buyers.

What the Bank of Canada Announced in January 2026

In its January 2026 decision, the Bank of Canada held the overnight rate steady, signaling a cautious approach as inflation continues to move closer to the central bank’s target range.

While the Bank acknowledged progress in inflation control, it emphasized ongoing risks related to housing costs, wage growth, and global economic uncertainty. As a result, policymakers avoided aggressive cuts early in the year.

Immediate Impact on Mortgage Rates

Variable Mortgage Rates

Because variable mortgages are directly tied to the Bank of Canada’s policy rate, most borrowers with variable-rate mortgages will see no immediate change to their interest rates or payments following the January announcement.

However, the tone of the statement suggests that future cuts remain possible later in 2026 if economic conditions allow.

Fixed Mortgage Rates

Fixed mortgage rates are influenced more by bond yields than by the overnight rate itself. Since financial markets largely anticipated the January decision, fixed rates remained relatively stable, with only minor fluctuations depending on lender competition.

What This Means for Mortgage Renewals in 2026

2026 is a major mortgage renewal year across Canada. For borrowers coming off ultra-low pandemic-era rates, payments may still rise—despite rate stabilization.

Key renewal considerations:

• Don’t accept your lender’s first renewal offer

• Compare fixed, variable, and shorter-term options

• Negotiate rates, fees, and prepayment terms

Shopping around can often save borrowers thousands of dollars over the term.

How Homebuyers Are Affected

For buyers, the January 2026 rate hold brings predictability. Rate holds remain an effective strategy, protecting buyers from short-term volatility while allowing flexibility if rates fall later.

Affordability remains stretched in major markets, but stable rates improve confidence and long-term planning.

Should Borrowers Lock In or Wait?

There’s no one-size-fits-all answer, but many mortgage experts recommend:

• Shorter fixed terms (2–3 years) for flexibility

• Variable rates for borrowers comfortable with payment changes

• Locking in early when purchasing or refinancing

Trying to perfectly time the market is risky—budget certainty matters more than chasing the lowest possible rate.

Outlook After the January 2026 Decision

The Bank of Canada’s January announcement suggests a wait-and-see approach for the first half of 2026. If inflation continues to cool and economic growth slows, rate cuts later in the year remain on the table.

For now, borrowers should plan for rate stability, not rapid declines.

Final Thoughts

The January 2026 rate announcement provides reassurance that borrowing costs are no longer rising aggressively—but it also confirms that patience and preparation remain key.

Whether you’re renewing, buying, or refinancing, understanding how Bank of Canada decisions affect your mortgage can help you make smarter financial choices in 2026.