Where Are Canadian Interest Rates Headed in 2026-2027?
The Bank of Canada's policy rate sits at 2.25%, where it has been held since December 2025, and the big-bank prime rate is around 4.45%. Forecasters are split on what comes next: BMO, CIBC, and TD expect the policy rate to hold at 2.25% through the end of 2027, while RBC sees it rising to 3.25% by end-2027. These are forecasts that move with new data — not predictions to plan your life around.
The forecaster spread
| Forecaster | Policy rate call |
|---|---|
| BMO / CIBC / TD | Hold at 2.25% through end-2027 |
| Scotiabank | 3.0% by early 2027 |
| CIBC / National Bank | 2.75% by end-2027 |
| RBC | 3.25% by end-2027 |
The range spans a full percentage point — from no change to more than 1% higher. That spread is the real message: the direction of rates is genuinely uncertain.
What market participants expect
The Bank of Canada's market-participants survey for Q2 2026 put the median expectation at 2.25% through December 2026, rising to 2.5% in Q2 2027 and 2.75% in Q3 2027. So the market's center of gravity is a gentle climb back toward 2.75% — closer to the dovish camp than to RBC's 3.25%.
What this means for your mortgage decision
- Variable-rate mortgages track prime, which tracks the policy rate. If rates hold near 2.25%, variable stays near today's levels; if RBC is right, variable borrowers face about 1% more.
- Fixed-rate mortgages are priced off bond yields, which already embed rate expectations. A forecast of 2.75–3.25% means fixed rates have limited room to fall.
- The stress test still applies regardless: you must qualify at the greater of your contract rate plus 2% or 5.25%.
The practical takeaway: none of the major forecasts foresee a return to the near-zero era, and none foresee a sharp spike either. Budget for the middle of the range and leave room for the top end.
Frequently asked questions
How quickly does a Bank of Canada rate change reach my mortgage?
For variable-rate mortgages, lenders typically adjust prime within days of a BoC decision. Fixed rates move with bond yields and can shift before, during, or after an announcement — they are not mechanically tied to the policy rate.
Should I lock in a fixed rate based on these forecasts?
Forecasts change with inflation and economic data. The spread between the most dovish (2.25%) and most hawkish (3.25%) calls is a reminder that nobody knows. Choose fixed vs. variable based on your tolerance for payment changes, not on which forecast you like.
What was the policy rate before it was held at 2.25%?
The Bank of Canada cut aggressively through 2024–2025 before holding at 2.25% starting December 2025. That easing cycle is largely what brought today's prime of ~4.45%.
Canadian Mortgage Calculator 2026 — CA$29
Stress-test your own renewal rate with the Canadian Mortgage Calculator 2026.
Sources
- Nesto, Mortgage rates forecast Canada — bank forecaster roundup: https://www.nesto.ca/mortgage-basics/mortgage-rates-forecast-canada/
- Bank of Canada, Market participants survey, second quarter of 2026: https://www.bankofcanada.ca/2026/07/market-participants-survey-second-quarter-of-2026/
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