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Bank of Canada Holds Rate at 2.25%: What a "Resilient" Economy Means for Your Mortgage


The Bank of Canada (BoC) has made its final interest rate decision of 2025, and for homeowners and prospective buyers, the keyword is "stability."


On Wednesday, December 10, the central bank announced it is holding its overnight rate steady at 2.25%. This decision comes after a 25-basis point cut in October and signals that the BoC believes the current rate is sitting in the "neutral" sweet spot—supporting the economy without fueling inflation.


Here is everything you need to know about today’s announcement and how it impacts your mortgage rates in Canada.


Why Did the Bank of Canada Hold Rates?

The decision to pause rate cuts was driven by one main factor: the Canadian economy is performing better than expected. Despite global uncertainties and trade tensions, the BoC described the economy as "resilient overall."


Governor Tiff Macklem highlighted several positive economic indicators that supported the hold:

  • Stronger GDP Growth: The economy grew by an unexpected 2.6% in the third quarter of 2025.

  • Healthy Job Market: The unemployment rate dropped to 6.5% in November, showing that Canadians are still finding work.

  • Inflation is on Target: The Consumer Price Index (CPI) for October was 2.2%, sitting comfortably near the Bank’s 2% target.


With these numbers in mind, the Bank signaled that the current policy rate of 2.25% is appropriate to help the country navigate ongoing structural changes in the global economy.


What This Means for Mortgage Rates

For Canadian borrowers, a rate hold brings a mix of stability and caution. Here is the breakdown:


1. Variable-Rate Mortgages

If you currently have a variable-rate mortgage or a Home Equity Line of Credit (HELOC), you will see no change in your payments or interest costs.

  • Prime Rate: Remains at 4.45%.

  • Verdict: You continue to benefit from the rate cuts that occurred earlier in the year.


2. Fixed-Rate Mortgages

While the BoC controls the overnight rate, fixed mortgage rates are driven by the bond market. Interestingly, the strong economic data that caused the BoC to pause has also pushed bond yields higher.

  • What’s Happening: Bond yields have risen recently, leading lenders to increase fixed mortgage rates by approximately 0.20%.

  • Verdict: If you are shopping for a fixed rate, you may see slightly higher offers than you would have a few weeks ago.


The Outlook for 2026

Is this the end of low rates? Not necessarily. While some economists predict the BoC might keep rates at this level through 2026, the Bank remains data-dependent. Governor Macklem emphasized that if the economic outlook changes, they are "prepared to respond."

The next interest rate announcement is scheduled for January 28, 2026. Until then, we expect a period of relative stability in the mortgage market.


What Should You Do?

  • If you are renewing soon: Don't panic about the slight uptick in fixed rates. Rates are still significantly lower than their peak. Compare your renewal offer with current market rates to ensure you aren't overpaying.

  • If you are buying a home: With the market stabilizing, now is a great time to get a pre-approval to lock in a rate before any further potential increases in the bond market.


Need help navigating these changes? At LowRatesCanada.com, we monitor the market daily to find you the lowest mortgage rates available. whether you prefer the stability of a fixed rate or the potential savings of a variable one.


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