🎯 What’s your buying power at these rates?
Estimate your property value and borrowing capacity
Estimate my property →After seven consecutive rate cuts since June 2024, the Bank of Canada holds its policy rate at 2.25% in February 2026. Mortgage rates offered by financial institutions reflect this accommodative monetary policy. Here’s the complete picture.
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🏦 The 2.25% Policy Rate — What It Means
The policy rate is the rate at which major banks lend to each other. It directly influences variable rates and indirectly affects fixed rates through the bond market.
2.25%
Current policy rate
5.00%
Peak reached in 2023
-2.75%
Cumulative drop from peak
💡 Did you know? The Bank of Canada cut its policy rate from 5.00% to 2.25% in just 18 months, one of the fastest declines in its history. The goal: stimulate the economy amid a slowdown.
💰 5-Year Fixed Rates: 3.89% to 4.29%
Fixed rates depend on the Canadian bond market rather than the policy rate. Here are current ranges by institution type:
3.89%
Best 5-year fixed rate
4.09%
Average big bank rate
4.29%
Standard posted rate
✅ Tip: never accept the posted rate. By working with a mortgage broker or negotiating with your bank, you can save 0.20 to 0.40 percentage points.
⚖️ Fixed vs Variable: Which to Choose in 2026?
An unusual situation in February 2026: variable rates are higher than fixed rates. Here’s the comparison:
✅ 5-year fixed
3.89 - 4.29%
Stable, predictable payments
Protection against rate hikes
Recommended in 2026
⚠️ Variable rate
4.45 - 4.90%
Currently higher than fixed
Could drop if BoC cuts further
Riskier in uncertain times
⚠️ Note: historically, variable rates were almost always lower than fixed rates. The current inverted situation exists because the bond market already prices in low long-term rates, while the prime rate hasn’t fully followed the policy rate cuts.
💳 Impact on Your Buying Power
Mortgage rates directly impact how much you can borrow. Here are concrete examples for a household earning $100,000 per year:
$485,000
Capacity at 3.89%
$460,000
Capacity at 4.09%
$440,000
Capacity at 4.29%
The difference between the best and worst fixed rate represents $45,000 in borrowing capacity. In Montreal, that can make the difference between getting or missing out on the property you want.
🧮 Calculate your borrowing capacity and payments
Buyer calculator →🔮 Forecast for the Rest of 2026
Several factors will influence rate trends throughout 2026:
1. 📉 Policy rate — The BoC may hold at 2.25% or cut slightly if the economy slows
2. 📊 Inflation — Canadian inflation is nearing the 2% target, giving the BoC room to manoeuvre
3. 🌍 Global context — Trade tensions with the United States create uncertainty
4. 🏠 Renewals — 60% of Canadian mortgages are up for renewal in 2025–2026, a historic wave
💡 Key takeaway: 5-year fixed rates could drop below 3.75% by summer 2026 if Canadian bonds continue to decline. For renewals, that’s good news — but for purchases, it could stimulate demand and push prices higher.
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