Following the Bank of Canada’s April 29, 2026 decision to hold the policy rate at 2.25% (4th consecutive pause), mortgage rates enter a period of stability for May. The prime rate stays at 4.45%, placing the variable rate around 2.70%(prime − 1.75%). This is an ideal window to lock in financing before the next announcement on June 10, 2026.
1. May 2026 Rates Snapshot
2.25%
BoC policy rate
2.70%
Average variable rate
3.69%
Average 5-year fixed
The prime rate at major Canadian banks remains stable at 4.45% after the April 29 decision. The spread between fixed (3.69%) and variable (2.70%) is currently ~0.99 points, in favor of variable.
2. Fixed vs Variable: Which to Choose?
Variable (2.70%) — offers maximum savings at current rates. Advantage if the BoC holds or cuts on June 10. Limited risk given CPI stability at 1.8% (below the 2% target) and moderate GDP growth expected (+1.2% in 2026 per BoC).
5-year fixed (3.69%) — offers the security of stable payments. Relevant against trade uncertainties (Trump 50% tariffs on steel/aluminum since June 2025 + 25% surtax on derived products) and geopolitical tensions. The premium over variable is approximately $222/month on a $450,000 mortgage.
3. Concrete Monthly Payment Impact
Reference mortgage: $450,000, 25-year amortization
Variable 2.70%: ~$2,064/month
Fixed 3.69%: ~$2,286/month
Spread: ~$222/month in favor of variable, or ~$2,664/year
Over a full 5-year term, the potential savings of variable amount to approximately $13,320if rates stay stable. An additional 0.25% cut would add ~$3,360 in savings over the term.
4. June 10, 2026 Outlook
The BoC’s next decision is expected on June 10, 2026. Three scenarios:
Scenario A (likely) — Hold at 2.25% (5th pause). CPI below target, stability valued against trade uncertainties.
Scenario B — 0.25-point cut to 2.00%. If Trump tariffs weigh on growth.
Scenario C (unlikely) — Hike. Excluded barring major inflation shock.
For buyers and homeowners with renewals coming up, May 2026 remains an excellent time to act: rates are at their lowest since 2022 and a mortgage broker can negotiate 0.20 to 0.50% below the posted rate.
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