BoC Holds at 2.25%: What to Do With Your Mortgage

The Bank of Canada just held its overnight rate at 2.25% (December 10, 2025). That single number quietly determines how fast your variable mortgage, line of credit, and other floating-rate debt can change—sometimes by hundreds of dollars a month.

The bigger story isn’t the hold itself. It’s what the hold signals: after a long stretch of cuts, we’ve likely entered a period where rates don’t move much—unless inflation flares up again or trade shocks hit the economy. If you’re managing a mortgage, thinking about renewing in 2026, or trying to balance debt payoff versus savings, this is the moment to get your plan tight.

This post is part of our Interest Rates, Banking & Personal Finance series, where we translate central bank decisions into real household moves you can make.

What the 2.25% rate hold actually changes (and what it doesn’t)

A Bank of Canada hold means the policy “anchor” stays put. In plain terms: variable borrowing costs should stay steady, and lenders won’t need to immediately reprice products that track prime.

Here are the concrete numbers Canadians should care about right now:

• Bank of Canada overnight rate: 2.25% (held)
• Canada prime rate (as cited in the announcement coverage): 4.45% (unchanged)
• Lowest advertised 5-year variable mortgage rate (at the time): 3.45% (unchanged)

What doesn’t change overnight:

• Your existing fixed mortgage rate (it’s locked for the term)
• Fixed mortgage pricing immediately due to the policy hold (fixed rates follow bonds more than the overnight rate)

Snippet-worthy truth: The Bank of Canada sets the direction for variable rates; the bond market sets the mood for fixed rates.

Why the Bank of Canada paused: stability, not a victory lap

The rate hold is a sign the Bank thinks policy is “about right” for current conditions—tight enough to keep inflation near target, not so tight that it crushes growth.

Inflation is close to target

Inflation was reported around 2.2% in October 2025, which is close to the Bank’s 2% target. When inflation is behaving, central banks prefer to stop fiddling and see how prior moves filter through.

Growth and jobs surprised on the upside

Two datapoints are hard to ignore:

• 54,000 jobs added in November, pushing the unemployment rate down to 6.5%
• Q3 GDP growth of 2.6% (July–September), far above the Bank’s earlier forecast

That combination makes cuts harder to justify. When the economy looks sturdy, the Bank worries that lowering rates further could reheat inflation.

Trade risk is the wildcard

The Bank explicitly flagged global trade volatility and tariff risk. Canada’s economy can look fine in headline numbers while specific industries get squeezed.

Here’s how that matters for households: trade shocks can push prices around (inflation risk) and hit jobs (recession risk). Those forces tug rates in opposite directions—which is why we’re likely in a “wait and see” phase.

What this means for mortgage rates in Canada

If you only read one section, make it this one.

Variable mortgage rates: steady payments (for now)

If you have a variable-rate mortgage tied to prime, a BoC hold usually means:

• Your interest rate stays the same
• Your payment stays the same (for adjustable-rate variable mortgages)
• For fixed-payment variable mortgages, your payment stays, but the interest/principal mix stays roughly consistent instead of drifting.

If you’re shopping for a mortgage, a stable overnight rate is helpful because it reduces “surprise” risk over the next few months. But don’t confuse stability with safety: variable rates can still move quickly if inflation jumps.

Practical move I like in stable periods: request a rate hold (pre-approval or lender rate guarantee). Even if rates don’t drop, it protects you if spreads worsen or lenders reprice.

Fixed mortgage rates: bond yields are the real driver

Fixed rates are already reacting to markets, not the Bank’s hold.

The coverage noted that fixed rates rose about 20 basis points in the week before the announcement, with the lowest 5-year fixed around 3.89% at that time. That’s a reminder that you can get a BoC hold and still see fixed mortgage rates climb.

Why? Investors demand higher yields when they see stronger growth, stickier inflation risk, or more uncertainty. Lenders then pass those higher funding costs into fixed mortgage pricing.

If you’re renewing soon: don’t assume waiting helps. In a stable-BoC / rising-bond-yield environment, waiting can be expensive.

Renewals in 2026: the “rate shock” conversation is changing

A lot of Canadians spent 2023–2025 bracing for pain at renewal. With the overnight rate down to 2.25% after a long series of cuts, the question for 2026 renewers becomes more nuanced:

• If you’re coming off a very low fixed rate from years ago, renewal could still mean higher payments.
• But the direction of travel has improved, and budgeting is easier when rates stop moving every announcement.

The right stance for renewers now: treat the hold as an opening to negotiate, not as permission to procrastinate.

Rate stability is a budgeting gift—use it to get ahead

When rates whip around, your job is survival. When rates stabilize, your job is optimization.

1) Build a “rate-resilience” budget

Even if you’re comfortable today, plan like rates could rise again.

A simple approach:

• Calculate your monthly payment at today’s rate
• Recalculate it at +1.00% higher
• Save the difference (or use it to prepay principal)

If rates never rise, you’ve built a cushion. If they do, you’ve already trained your cash flow.

2) Make prepayments where they matter most

In a stable-rate window, it’s tempting to invest instead of paying down debt. I’m not anti-investing, but I am pro-math.

• Paying down a mortgage is a guaranteed return equal to your after-tax borrowing rate.
• The emotional ROI is real too: lower required payments buy flexibility.

A good middle ground:

• Put a portion of “extra” cash into a TFSA (liquidity + options)
• Put a portion into mortgage prepayments (certainty + lower debt)

3) Don’t ignore non-mortgage debt tied to prime

Rate holds help more than mortgages. They also stabilize:

• Lines of credit n- HELOC rates
• Some business credit products

If you’re carrying high-interest credit card debt, though, this announcement doesn’t rescue you. Credit card rates don’t fall just because the BoC holds. If you have balances at 20%+, your best “interest rate play” is still aggressive payoff or a structured consolidation plan.

Savings and investing: what a 2.25% BoC hold means for your cash

Stable policy rates tend to stabilize savings rates too—though banks can change promos whenever they want.

High-interest savings accounts: good for goals, not forever money

Use HISA cash for:

• Emergency fund
• Property tax buffer (homeowners, this one’s underrated)
• Near-term goals (under 2–3 years)

If you’re sitting on a large cash pile because you’re “waiting for clarity,” this is your nudge: clarity rarely arrives on schedule. Your plan should handle uncertainty.

GICs: stability can make laddering attractive

In a market that’s not obviously heading down or up, GIC ladders are a sensible move:

• Split money into 1-, 2-, 3-, and 4- (or 5-) year terms
• As each matures, reassess rates and your timeline

You avoid the regret of locking everything at once.

Investing: don’t let rate headlines run your portfolio

Rate holds can calm markets, but your portfolio shouldn’t be reacting to every central bank meeting anyway.

If you’re investing for 10+ years:

• Keep your contributions steady
• Rebalance if needed
• Focus on fees, diversification, and your risk level

The real personal finance win in a stable-rate period is boring consistency.

Common questions Canadians are asking right now

Should I choose fixed or variable with rates holding?

If you value predictability, fixed can still be worth it—especially if you’re close to your affordability ceiling. If you have flexibility and can handle payment swings, variable can work, but you need a plan for what you’ll do if rates rise.

A clean rule: Pick the option you can stick with during stress. The “perfect” rate is useless if you panic-switch at the worst time.

Will the Bank of Canada cut again soon?

Markets are increasingly pricing in stability, not rapid cuts. With inflation near target and the economy showing strength (jobs and GDP), cuts aren’t the default path. The bigger swing factor is trade policy and tariff-related shocks.

If fixed rates are rising, should I lock in immediately?

Not automatically—but you should shop and negotiate early. If bond yields keep drifting higher, fixed offers can worsen quickly. Waiting without a plan is the costly move.

Your next move if you have a mortgage (or need one soon)

A 2.25% Bank of Canada hold is a chance to act from a position of calm. Use it.

If you’re buying, renewing, or refinancing in the next 3–6 months, these are the steps I’d take:

1. Get a rate hold so you’re protected while you decide.
2. Run two payment scenarios: current rate and +1% higher.
3. Choose a strategy: prepay principal, build cash buffer, or invest—ideally a mix.
4. If you’re renewing, start early and treat it like a negotiation, not paperwork.

Rate stability is not the finish line. It’s breathing room.

Where do you want your finances to be by the time the next big rate move happens—already prepared, or scrambling to catch up?