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Bank of Canada Holds Interest Rates at 2.25%: What it means for mortgages, homebuyers, and loans
On January 28th, 2026, the Bank of Canada (BoC) announced that it would continue to hold it's key rate at 2.25%. What does this mean for potential homebuyers, homeowners, and everyone else?
Niamh GyulayContent Marketing Specialist @ Pine
4 min read
On January 28th, the Bank of Canada (BoC) announced that it would again be holding its policy interest rate at 2.25%, marking another pause after December’s decision. To many, this could sound like business as usual,” however, if you own a home or have a loan, this hold is actually important to note. By holding their rates, the Bank of Canada thinks the economy is in a fragile balance. The Bank isn’t confident enough to cut rates further, but it’s also not convinced conditions are strong enough to raise them.
What the Bank of Canada Is Signaling
This announcement came with a noticeably more cautious tone. Alexander Kiriakou, COO at Pine, explains it this way:
“The Bank of Canada leaned more dovish with this rate announcement as they introduced comments on increased uncertainty. If trade wars escalate, rate cuts could come back into play. At the same time, the renewal wave of ultra-low COVID-era mortgages could reduce household disposable income more than expected, which changes the outlook from earlier assumptions that the next move would be a hike. If home values remain soft, affordability pressures will also come into sharper focus.”
What This Means for You
Here’s what that means for you, whatever your financial situation:
If you have a variable rate mortgage, the good news is that your rates will likely stay the same as they have looked in the recent past, meaning you won’t see a jump in your monthly bill. However, many borrowers were hoping for additional cuts in early 2026. This hold signals that maybe, cuts might be over for now, and your rate has probably hit its floor. If your budget allows, consider using this period of stability to pay down principal faster and reduce long-term interest costs.
If you have a fixed-rate mortgage, you’ve already locked in your rate so this week’s announcement doesn’t mean anything for you immediately. On the other hand, if you’re renewing your mortgage soon, this hold will affect you. Fixed rates are influenced by “bond yields” or investor activity. Because the BoC mentioned “heightened uncertainty” regarding trade and the economy, fixed rates might stay steady or even slightly fluctuate. If you’re renewing your mortgage in 2026, don’t expect rates to be much lower than they are now. Experts suggest we are in a “wait and see” period. Locking in at the right time and choosing the right term matters more than trying to time a dramatic drop.
If you have car loans or personal lines of credit, generally they have a variable rate, so the Prime rate dictates how they move and what they are. The BoC didn’t move their rate this time, so your bank will also likely not change your rates. That being said, now is an excellent time to pay down principal (the money you borrowed without the interest) before any future rate hikes later this year and in 2027.
Why the Bank of Canada Hit Pause
Why did the Bank of Canada hold the rate, anyway? Canada is currently in a “wait and see” period. We’re watching two big things:
Trade uncertainty: New trade discussions with the US and Mexico (CUSMA) are creating some clouds over the economy.
Inflation: Prices are still rising a bit faster than the Bank likes (currently around 2.4%), thus, they don’t want to cut rates and accidentally make things more expensive again.
“Bank of Canada rate decisions don’t just affect mortgages but they ripple through the entire economy, from credit cards and student loans to small business financing. Even small changes influence the cost of living and signal where the economy is heading” says Malcolm Driver, Principal Broker at Pine.
For consumers, the best thing to do is continue on as normal, pay down debt while interest rates are stagnant, and for lack of better words, wait and see.