Bank of Canada holds policy rate at 2.25%: what it means for borrowers

The decision

The Bank kept the overnight target at 2.25%, with the Bank Rate at 2.5% and deposit rate at 2.20%. The Bank said Canada's economy was showing signs of improvement while uncertainty remained elevated.

What this means for variable-rate borrowers

Variable mortgage and line-of-credit pricing is often more sensitive to changes in prime rates than fixed mortgage pricing. A hold means there was no new policy-rate move from this announcement, but individual lenders can still change product pricing and discounts.

What this means for fixed mortgages

Fixed mortgage rates are influenced more directly by bond yields and funding costs than by the overnight rate alone. A policy-rate hold therefore should not be read as a promise that fixed rates will stay unchanged.

A useful way to plan

Instead of guessing where rates go next, compare your current payment with a higher and lower renewal-rate scenario. A renewal stress test can show whether your cash flow still works if rates move against you.