On January 28, 2026, the Bank of Canada announced it will maintain its policy interest rate at 2%, choosing not to raise or cut rates.
After several years of aggressive hikes followed by gradual cuts, this decision signals what many Canadians have been waiting for: stability.
For homeowners, buyers, renters, and real estate investors, stable rates bring clarity. Mortgage costs are more predictable, affordability is improving, and the housing market is beginning to normalize.
Here’s what this means for you.
Why did the Bank hold rates steady?
The decision largely comes down to three factors.
First, inflation is back near the 2% target, which means the Bank no longer needs to raise rates to cool prices. Second, economic growth remains modest, not strong enough to justify higher borrowing costs. Third, global uncertainty — including trade risks and slower global growth — encourages a cautious approach.
As a result, the Bank has entered a wait-and-see phase. Instead of raising or lowering rates, it prefers to monitor how the economy performs over the next few months.
For Canadians, this likely means rates will remain relatively stable through most of 2026.
Impact on mortgages
The most direct effect is on borrowing costs.
If you have a variable-rate mortgage, your rate will likely remain unchanged for now. Your payments should remain predictable, with little risk of sudden increases. At the same time, further rate cuts are also unlikely, so don’t expect payments to drop much lower.
For fixed-rate mortgages, today’s environment is still favourable. Bond yields remain stable, keeping fixed mortgage rates lower than those many borrowers faced in 2023 and early 2024. This makes it a reasonable time to lock in a rate if you’re renewing or buying.
Overall, the message is simple: mortgage costs are no longer rising, and that improves financial confidence for many households.
What this means for home buyers
Lower and stable rates improve affordability.
Monthly payments are more manageable, and more buyers can qualify for financing. At the same time, home prices across many Canadian markets have flattened or grown slowly rather than surging.
This combination creates a rare window of opportunity, especially for first-time buyers.
Competition is lower than during peak pandemic years, and sellers are more realistic about pricing. Buyers have more negotiating power and time to make decisions.
That said, it’s still important to plan carefully. Rates may rise again, so avoid stretching your budget too far. Buying should make sense not just today, but also if rates increase at renewal time.
Homeowners benefit from stability
For existing homeowners, this period is a welcome relief.
Stable rates mean predictable mortgage payments and improved cash flow. Many households that faced payment shocks during rate hikes can now plan with greater certainty.
This is a good time to strengthen your financial position. Paying down principal faster, refinancing at better terms, or building emergency savings can all help prepare for future rate changes.
Think of 2026 as a reset year — a chance to regain balance after years of volatility.
Renters: indirect but meaningful effects
Renters don’t benefit directly from interest rate changes, but there are still indirect impacts.
When borrowing costs stabilize, landlords face fewer increases in their mortgage expenses. This reduces pressure to aggressively raise rents.
In addition, some renters may transition into homeownership now that affordability has improved slightly. This could gradually ease rental demand in certain markets.
If you’ve been considering buying, it may be worth exploring your options. With lower rates and slower price growth, ownership might be closer than you think.
Real estate investors: focus on cash flow
For investors, stable rates create a more predictable environment.
Lower financing costs improve cash flow and make it easier to analyze deals. Refinancing or purchasing rental properties becomes more attractive when borrowing costs are controlled.
However, this is not a fast appreciation market. Home prices are expected to rise modestly, not dramatically.
That means investors should prioritize steady rental income and long-term value over short-term flipping.
The smarter strategy in 2026 is simple: buy well, manage costs, and hold.
Housing market outlook for 2026
Canada’s housing market is shifting from extremes to balance.
We are no longer in a rapid seller’s market or a deep slowdown. Instead, expect moderate sales activity and gradual price growth.
This type of market favours serious buyers and long-term investors. It rewards thoughtful decisions rather than speculation.
For many Canadians, this normalization is healthy. It reduces risk and improves planning.
Will rates rise or fall next?
Most economists believe the Bank of Canada will hold rates steady.
Further cuts are unlikely unless the economy weakens sharply. If growth strengthens, small rate increases could return in late 2026 or 2027.
In other words, today’s rates are probably near the bottom of the cycle.
Planning for slightly higher rates in the future is wise.
Final thoughts
The Bank of Canada’s 2% rate decision signals stability, not excitement.
But stability is exactly what the housing market needs.
Lower borrowing costs, steady prices, and reduced uncertainty create better conditions for buyers, homeowners, and investors alike.
Whether you plan to buy, rent, or invest, 2026 is a year to move thoughtfully — not rush, but not wait forever either.
Smart, informed decisions will matter more.
Contact The Fisher Group – Your Real Estate Experts in Oakville and the GTA
Fisher Yu
📱 647.598.8488
📧 [email protected]
🌐 thefishergroup.ca
