What’s driving the market:

• Bank of Canada held the policy rate at 2.25% on December 10 — the final decision of the year. This pause means borrowing costs remain stable for now. Bank of Canada

• Despite the rate hold, fixed mortgage rates have drifted slightly higher as bond yields climb. Mortgage Rates Canada

• Analysts see the potential for variable-rate mortgages to regain popularity in 2026 as borrowers face rising renewal costs. Mortgage Professional

• Canada’s housing market has cooled, with sales down in most provinces — a reflection of affordability headwinds. NerdWallet

• Industry recap: 2025 has been a rollercoaster with shifting rate expectations and renewed focus on financing strategy. Mortgage Professional

Rate Trends: What You Should Know

Canada’s mortgage rate backdrop is shaped by central bank policy, bond market moves, and lender pricing.

Bank of Canada rate:

The overnight target remains 2.25%, unchanged in December. This influences prime lending and variable rates. Bank of Canada

Typical posted conventional mortgage rates:

5-Year Conventional Mortgage Rate: ~6.09% as of mid-December. YCharts
Note: Actual lender special/discounted rates may differ based on borrower profile.

Takeaway: Rates have been sticky — not collapsing despite rate actions — as markets absorb inflation data, many upcoming renewals, and economic signals.

Borrower Behavior Shift

New data shows a defensive trend in Canadian mortgage activity:

• Homebuyers and owners are shifting toward renewals and longer terms.

• Renewal quotes accounted for ~64% of activity, up sharply from last year; purchase and investment quotes have dropped. Mortgage Professional

Variable-rate interest has temporarily climbed due to recent BoC cuts — but many still favour fixed terms as a hedge against future rate risk. Mortgage Professional

💡 What This Means for You

🔹 Buying a Home

• Rates have not dropped substantially even though the central bank paused cuts.

• Locking in 5-year fixed rates can provide peace of mind in a volatile market.

• Variable rates may appeal if you expect rates to stay low — but experts caution about 2026 uncertainty. Yahoo Finance Canada 

🔹 Renewals & Refinancing

• A significant wave of renewals is underway; many homeowners face higher payments compared to 2021 rates.

• Shop around before renewing — even small rate differences can save thousands over a term.

🔹 First-Time Buyers

• Limited inventory and affordability challenges persist in major markets like Toronto and Vancouver. LendToday.ca

• Explore incentives like the First Home Savings Account (FHSA) and RRSP Home Buyers’ Plan to improve buying power. LeSolace.com

🔹 Alternative Options

• Green mortgages and energy-efficiency refinancing are gaining traction.

• Digital mortgage solutions and alternative lenders can cut processing time and improve rates for qualified borrowers.
  LeSolace

🔮 Looking Ahead to 2026

Here’s what to watch in the coming year:

✅ Interest rate direction: Markets are watching inflation and economic data for clues on future BoC rate moves.

✅ Mortgage demand patterns: Renewals and refinancing could dominate originations.

✅ Rate product popularity: Variable terms might grow again if credit conditions stay stable.

✅ Digital and inclusive lending: Alternative data and online platforms will shape access for non-traditional borrowers. LeSolace.com/contact

📨 Stay Informed with LeSolace

Whether you’re buying, refinancing, or reviewing your renewal options — we’re here to help.
Contact LeSolace for customized mortgage guidance or to review your best options in this evolving market.

LeSolace Corporation
Alberta | Manitoba | Ontario
Ontario FSRA 134156

1-888-622-2671