Bank of Canada Expected to Hold Rates at 2.25%: What It Means for Renewals & New Buyers

The Canadian mortgage market heads into December 2025 with a rare sense of stability. After two back-to-back rate cuts this fall, the Bank of Canada’s benchmark overnight rate now sits at 2.25%, the lowest level since early 2023. And according to early-December commentary from lenders and rate aggregators such as , most analysts believe the central bank is preparing to pause here—at least for now.

This expectation sets the tone for mortgage borrowers heading into December 10, when the BoC will announce its final policy decision of the year. After 18 months of volatility, Canadians are asking the same question: Does a stable rate at 2.25% finally signal a smoother 2026?

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Why the BoC Cut Rates Twice This Fall

The Bank of Canada surprised many economists when it delivered two consecutive rate cuts—first in September 2025, then again in late October. That October move brought the policy rate down from 2.75% to 2.25%, easing pressure on mortgage holders who had watched borrowing costs climb sharply since 2022.

The BoC justified the cuts by pointing to three things:

1. Cooling inflation, especially in goods and shelter costs.
2. Slowing economic growth, with consumer spending weakening across several provinces.
3. Rising mortgage delinquency “pockets”, especially among over-leveraged borrowers in Ontario and Alberta.

While the overall national delinquency rate remains low, the central bank has repeatedly warned that the mortgage market is in a “fragile transition,” especially as large cohorts of borrowers renew at higher rates.

Still, the October cut was widely seen as a strategic move to prevent deeper strain on households entering renewal season.

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Why Most Analysts Expect a Pause on December 10

Even though inflation is moderating and growth remains weak, analysts surveyed by major rate trackers such as agree on one thing: the BoC is unlikely to cut again in December.

The case for holding steady at 2.25% centers around:

• Domestic inflation that remains above the BoC’s comfort zone, even if trending in the right direction.
• Concern about cutting too aggressively, which could reignite demand in an already tight housing market.
• The BoC’s preference for “data confirmation”, meaning it wants to see more sustained disinflation before moving further.
• The global backdrop, where the Federal Reserve and Bank of England are also signalling slower, more cautious easing cycles.

Markets currently price in one or two small cuts in the first half of 2026, but almost zero probability of a December 2025 move.

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What This Means for Mortgage Renewals

For the hundreds of thousands of Canadians renewing between now and early 2026, a steady 2.25% overnight rate brings relative predictability.

• Five-year fixed rates have already fallen from their summer highs, landing in the 3.89%–4.59% range among competitive lenders.
• Three-year fixed options—popular among borrowers waiting for rates to decline further—are drifting near 4.29%–4.79%.
• Variable rates, tied to the prime rate, saw immediate relief after the October cut. But with the expected hold in December, the next drop may not come until early spring.

More importantly, lenders expect renewal shock to be milder than originally projected. Many households renewing in 2026 will likely face increases, but not as severe as the worst-case estimates from mid-2024.

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Impact on First-Time Homebuyers

A stable rate environment also shapes behaviour among first-time buyers.

Three key effects are already visible:

• Buyers are less fearful of sudden mortgage payment swings.
• Pre-approvals have picked up—particularly in Ontario and British Columbia—indicating cautious optimism.
• More shoppers are returning to fixed-rate mortgages after two years of variable-rate uncertainty.

But affordability remains a challenge. Home prices have not meaningfully corrected in most major markets, and rate stability alone cannot offset limited inventory and high down-payment requirements.

Still, for many buyers, a steady BoC rate acts like a green light to explore options heading into early 2026.

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What to Watch Next

All eyes are now on three upcoming signals:

1. The December 6 jobs report, which will heavily influence the BoC’s tone on December 10.
2. Updated inflation data, especially shelter and rent inflation.
3. Lender activity, as banks adjust fixed-rate products ahead of the holidays.

If inflation cools further, economists expect the next rate cut could arrive by March or April 2026.

A steady 2.25% overnight rate is about as calm as the Canadian mortgage landscape has been in years. Renewers get breathing room, buyers get clearer expectations, and variable-rate holders avoid another payment shock—for now.