What is the mortgage interest rate forecast for 2024 in Canada?

The Canadian economy continues to show signs of weakness and recent inflation figures hovered at 1.7% last month, below the 2% target. Furthermore, unemployment reached a 3-year record high of 6.8%. This has prompted the Bank of Canada to cut rates further to avoid dragging the Canadian economy down further.

How are bond yields related to fixed mortgage rates?

Banks will originate mortgages and then pool a bunch of them into what is called a mortgage backed security (MBS) to be sold off to investors (someone like a pension fund for example) who collect a yield on the MBS. The pension fund could invest in other fixed income investments, so mortgage rates rise as a result to entice investors to keep buying the MBS. lBond yields and mortgage rates move in the same direction.

How does the overnight rate affect the prime rate?

When the Bank of Canada raises the overnight rate, it becomes more expensive for banks to borrow money. This will result in banks raising their prime rates to cover the added costs. If the Bank of Canada lowers the overnight rate, banks usually will lower their prime rates.

2024 Key Takeaways (updated December 2024)

The prime rate in Canada as of December 11, 2024 is 5.95%. (last change: -0.50% on December 11, 2024) On Wednesday, December 11, 2024, The Bank of Canada announced that it will be cutting its rate, bringing the policy rate to 3.25%. Recent data indicates inflation is decelerating toward the Bank of Canada's target, coupled with slow economic growth.

2024 Predictions (updated December 2024)

The Canadian economy continues to show signs of weakness and recent inflation figures hovered at 1.7% last month, below the 2% target. Furthermore, unemployment reached a 3-year record high of 6.8%. This has prompted the Bank of Canada to cut rates further to avoid dragging the Canadian economy down further

Will Interest Rates in Canada Go Down in 2024?

The Canadian economy continues to show signs of weakness and recent inflation figures hovered at 1.7% last month, below the 2% target. Furthermore, unemployment reached a 3-year record high of 6.8%. This has prompted the Bank of Canada to cut rates further to avoid dragging the Canadian economy down further

Canada Interest Rate Forecast 2026-2031

Q: How will the latest Bank of Canada interest rate announcement impact your monthly mortgage payments?

For variable rate mortgages (meaning your payments don’t fluctuate as prime rates change): The September 4th decrease means that less of your existing mortgage payments go towards the interest portion of your mortgage as your amortization decreases, but your payments will stay the same. Use our Mortgage Renewal Calculator to get an estimation of what your expected rate and payment will be at your maturity date. If the payment isn’t manageable, connect with your advisor well in advance to look at all options. For adjustable rate mortgages (meaning your payments fluctuate as prime rates change): The latest cut will further decrease your mortgage payments and the outlook shows that further cuts from the Bank of Canada are expected throughout 2024 and into 2025 to further reduce your mortgage payments.`

Last Updated: January 28, 2026

CURRENT INTEREST RATE FORECAST FOR 2026: 2.25% (last updated January 28, 2026)

For more information about the 2026 Bank of Canada rate announcement schedule, read more here 👈

Key Takeaways (updated January 2026)

On Wednesday, January 28, 2026, the Bank of Canada announced that it will be holding its rate, keeping the policy rate at 2.25%.
GDP remains weak, uncertainty with the US is worsening, core inflation remaining in the high 2s and a stable unemployment rate all support the decision to hold rates.

2026 Predictions (updated January 2026)

Expectations are largely unchanged since last month, the market expects no rate movement for 2026 and roughly 1 rate hike per year for years 2027-2030.

Will Interest Rates in Canada Go Down in 2026?

On Wednesday, January 28, 2026, the Bank of Canada announced that it will be holding its rate, keeping the policy rate at 2.25%.

Commentary from Perch’s CEO and Principal Mortgage Broker, Alex Leduc:

GDP remains weak, uncertainty with the US is worsening, core inflation remaining in the high 2s and a stable unemployment rate all support the decision to hold rates.

Commentary from Perch's CEO and Principal Mortgage Broker, Alex Leduc:

Expectations are largely unchanged since last month, the market expects no rate movement for 2026 and roughly 1 rate hike per year for years 2027-2030.

When is the next Bank of Canada rate increase and what can I expect?

The current market overnight interest rate forecast for the remainder of 2026 is:

Variable Rate Interest Forecast 2026 to 2030 (as of February 2026)
Date	5-year variable rates
1/31/26	3.55%
6/30/26	3.57%
12/31/26	3.65%
6/30/27	3.73%
12/31/27	4.09%
6/30/28	4.12%
12/31/28	4.27%
6/30/29	4.26%
12/31/29	4.37%
6/30/30	4.47%
12/31/30	4.58%
6/30/31	4.60%
12/31/31	4.69%

How will the latest Bank of Canada interest rate announcement impact your monthly mortgage payments?

For variable rate mortgages (meaning your payments don’t fluctuate as prime rates change): Your existing mortgage payments will remain unchanged. Use our Mortgage Renewal Calculator to get an estimation of what your expected rate and payment will be at your maturity date. If the payment isn’t manageable, connect with your advisor well in advance to look at all options.
For adjustable rate mortgages (meaning your payments fluctuate as prime rates change): Your payments will remain unchanged for now and the current outlook no further rate cuts from the Bank of Canada throughout 2026.

What is the interest rate forecast for 2026 in Canada? (updated January 2026)

Commentary from Alex Leduc, Principal Mortgage Broker and CEO of Perch:

Expectations are largely unchanged since last month, the market expects no rate movement for 2026 and roughly 1 rate hike per year for years 2027-2030.

What is CPI and how does it affect the Canada interest rate forecast?

CPI stands for consumer price index and it is the measure of average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is mainly used to measure inflation. A rising Consumer Price Index (CPI) would prompt the central bank to raise interest rates. The CPI basket includes 8 main categories of goods and services: Food, Shelter, Household operations, Clothing, Transportation, Health, Recreation, and Alcoholic beverages. CPI data is reported for various geographic areas, including Canada, provinces, and select cities, such as Whitehorse, Yellowknife, and Iqaluit.

What affects the Bank of Canada’s interest rate forecast?

We look at some of the core factors that the Bank is monitoring to gauge which direction they are likely to go. In this case, all indicators seem to indicate they will hold.

Real GDP Growth: GDP growth in Q2 of 2025 slowed to 1.2% (Source: Trading Economics). The Bank of Canada is expecting GDP growth of 0.8-1.6% in 2025 and -0.2-1.4% in 2026. This is below expectations and would support a cut. (Source: Bank of Canada)
Inflation: Core inflation (year over year) in Sept was 2.8% (vs 2.6% in Aug), above the Bank’s 2% inflation target and is stubbornly staying in the high 2s. This would support a hold. (Source: Trading Economics)
Unemployment: Remained stable at 7.1% in Sept (0.5% higher than 1 year ago). On an absolute level, this is above what is deemed to be maximum sustainable employment and would justify a cut. (Source: Trading Economics)

What is the Canadian prime rate?

The prime rate is what major banks and financial institutions in Canada use to set interest rates for loans and lines of credit which also include variable rate mortgages.

Is prime rate the same as mortgage rate?

The prime rate is not the same as your mortgage rate. A prime rate is the base cost of borrowing from which lenders start to determine interest rates on mortgages, personal loans, credit loans or other financial products. In general, the prime rate mostly affects variable rate mortgages. Your mortgage rate is the interest rate you are expected to pay on any borrowed money.

What is the mortgage interest rate forecast for 2026 in Canada?

On Wednesday, January 28, 2026, the Bank of Canada announced that it will be holding its rate, keeping the policy rate at 2.25%.

Our current best 5-year fixed rate is 3.89% and the 5-year variable rate is 3.55%.

What are the interest rate predictions from the banks?

CIBC

CIBC expected the Bank of Canada to hold interest rates steady this month. Despite quarterly volatility, economic growth in the second half of 2025 was broadly in line with the Bank’s October Monetary Policy Report projections. However, CIBC notes that signs of renewed slowing toward the end of the year could be interpreted as a dovish signal by markets, even as investors continue to price in a higher risk of rate hikes than further cuts. Upcoming GDP data may point to a mild contraction in Q4, although industry-level figures have diverged more than usual from recent quarterly expenditure data due to significant trade-related volatility.

RBC

RBC maintained that its Canadian outlook remained for soft GDP growth, a gradual decline in the unemployment rate, and underlying inflation staying sticky above the Bank of Canada’s 2% target in 2026. With the overnight rate already at the lower bound of the neutral range, RBC argued that the case for additional easing was limited and that the Bank of Canada’s next move was more likely to be a rate hike, though the timing was uncertain. RBC expects the overnight rate to remain at 2.25% through 2026 before rising toward the top of the 2.25% to 3.25% neutral range in 2027, while noting that upside risks—such as stronger consumer spending or easing trade headwinds tied to shifts in the U.S. political landscape—could have pulled rate hikes forward into 2026.

Scotiabank

Scotiabank expected the Bank of Canada to leave the policy rate unchanged at 2.25% at its latest announcement, while using its communications to clarify its forward bias. The bank continued to see the next move in rates as higher, forecasting a cumulative 50 basis points of hikes later in the year, despite markets pricing the timing closer to year-end.

TD Canada

TD expected the Bank of Canada to hold the overnight rate at 2.25% for the foreseeable future, citing sub-par economic growth, trade-related uncertainty, and balanced inflation risks. While the labour market showed signs of stabilization and consumers remained relatively resilient, TD argued that ongoing uncertainty around U.S. trade policy and tariffs would continue to weigh on growth, reinforcing the case for the Bank to remain on hold.

BMO

BMO expected the Bank of Canada to hold the overnight rate steady at its January 28 meeting, marking a second consecutive pause following 100 bps of cuts in 2025. BMO noted that while economic data had softened since December, conditions had not changed enough to prompt a move, and Governor Macklem appeared to maintain a neutral bias with a slight dovish tilt. Slowing core inflation and persistent uncertainty around trade, particularly USMCA renegotiations, supported BMO’s view that monetary policy would remain on hold until the economic outlook shifted materially.

Alex Leduc

Alex Leduc is Founder and CEO at Perch. Prior to starting Perch, he worked in the real estate sector for 8 years in corporate finance, strategy and analytics roles. He is currently a Technical Advisory Committee Member of the Financial Services Regulatory Authority of Ontario (FSRA) and Co-Chair of the Canadian Lenders Association Mortgage Roundtable. Alex is a graduate of Ivey Business School from Western University and a CFA Charterholder. LinkedIn

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