Current overnight rate: 2.25% | Prime rate: 4.45% | Last updated: July 15, 2026
On July 15, 2026, the Bank of Canada held its overnight rate at 2.25% for the sixth consecutive meeting.
Prime rate stays at 4.45%. No change for variable mortgage holders or HELOCs.
The economy is starting to turn a corner. After nearly stalling in the first quarter, growth picked back up to around 2.5% in the second quarter. Inflation is still running hot at 3.2% in May, but that is mostly gas prices tied to the Middle East conflict. Core inflation, which strips out the swings in energy, is sitting close to 2%.
The Bank expects headline inflation to ease over the second half of 2026 and settle back near 2% by early 2027, as long as oil prices cooperate. That forecast depends heavily on how the conflict plays out.
Governing Council is watching two things closely. If war related cost pressures spread beyond gas into the broader basket of goods and services, a hike becomes more likely. If US trade uncertainty keeps dragging on business investment and hiring, a cut stays on the table. For now, the Bank is comfortable holding and watching.
📌 Next decision: September 2, 2026.
What This Means for Your Mortgage
Fixed rates are still elevated. The five-year insured fixed sits around 4.04%, held up by a five-year Government of Canada bond yield near 3.1%. That yield keeps getting pushed around by oil prices and Middle East headlines, not by anything the Bank of Canada is doing.
Variable rates are the cheaper option today, with the best five-year variable around 3.35% to 3.60%. But the risk has flipped. A cut is now the less likely move. If gas price pressure spreads into the rest of the basket, the Bank has said it will act, and variable holders would feel that right away.
Bottom line: if you want payment certainty, locking in around 4.04% fixed is a reasonable move. If you are betting the Bank stays on hold through the rest of the year, variable still works. Just go in knowing the risk now tilts toward a hike, not a cut.
What the BoC is Actually Seeing Right Now
Inflation: CPI rose to 3.2% in May, up from 2.8% in April, almost entirely due to gas prices from the Middle East conflict. Excluding gas, inflation is close to 2%, and core measures are also near target. The Bank expects headline inflation to ease to around 2.5% in the second half of 2026, then reach 2% by early 2027.
Growth: The economy nearly stalled in the first quarter, then rebounded to an estimated 2.5% pace in the second quarter as exports and residential investment picked up. Full year growth for 2026 is now forecast at 0.7%, down from the 1.2% the Bank expected back in April. The unemployment rate was 6.5% in June and has stayed in the 6.5% to 7% range since late 2024.
Policy stance: The Bank is looking through the gas driven spike in headline inflation, but has drawn a clear line. If cost pressures broaden beyond energy, a hike is on the table. If trade uncertainty with the US hits growth harder than expected, a cut stays possible. Right now, the Bank judges 2.25% as the right setting and is watching to see which risk wins out.
This is not a settled picture. Inflation is running hot on gas prices while the rest of the economy is only just catching its breath.
Where Are Interest Rates Going in Canada?
Do not expect a rate boom.
Do not expect aggressive cuts either.
The most likely path is another stretch of holds through the summer, with the balance of risk shifting toward a hike late in the year rather than a cut.
If oil prices ease and core inflation stays anchored near 2%, the Bank holds through the rest of 2026. If energy costs stay elevated long enough to push up wages and other prices, a hike in the fourth quarter becomes the more likely outcome.
| Bank | July 2026 | Sep 2026 | Dec 2026 | Dec 2027 |
|---|---|---|---|---|
 | 2.25% | 2.25% | 2.25% | 2.25% |
 | 2.25% | 2.25% | 2.25% | 2.75% |
 | 2.25% | 2.25% | 2.25% | 2.25% |
 | 2.25% | 2.25% | 2.25% | 3.25% |
 | 2.25% | 2.25% | 2.75% | 3.00% |
Last Updated: July 2026.
TD and BMO are the most patient, holding flat at 2.25% all the way through the end of 2027. CIBC starts hiking mid 2027, while RBC moves fastest once it gets going, climbing to 3.25% by the end of 2027.
Scotiabank remains the first mover, with a hike already priced in for December 2026 and a second early in 2027 that takes them to 3.00%, where they stay for the rest of the forecast window. That puts them well ahead of the pack in the near term, even though RBC ends up higher by the end of 2027.
| Announcement Date | Target Rate | Change |
|---|---|---|
| 2024 | ||
| January 24, 2024 | 5.00% | — |
| March 6, 2024 | 5.00% | — |
| April 10, 2024 | 5.00% | — |
| June 5, 2024 | 4.75% | -0.25% |
| July 24, 2024 | 4.50% | -0.25% |
| September 4, 2024 | 4.25% | -0.25% |
| October 23, 2024 | 3.75% | -0.50% |
| December 11, 2024 | 3.25% | -0.50% |
| 2025 | ||
| January 29, 2025 | 3.00% | -0.25% |
| March 12, 2025 | 2.75% | -0.25% |
| April 16, 2025 | 2.75% | — |
| June 4, 2025 | 2.75% | — |
| July 30, 2025 | 2.75% | — |
| September 17, 2025 | 2.50% | -0.25% |
| October 29, 2025 | 2.25% | -0.25% |
| December 10, 2025 | 2.25% | — |
| 2026 | ||
| January 28, 2026 | 2.25% | — |
| March 18, 2026 | 2.25% | — |
| April 29, 2026 | 2.25% | — |
| June 10, 2026 | 2.25% | — |
| July 15, 2026 | 2.25% | — |
| September 2, 2026 | TBC | TBC |
| October 28, 2026 | TBC | TBC |
| December 9, 2026 | TBC | TBC |
| Year | Start Rate | End Rate |
|---|---|---|
| 2015 | 1.00% | 0.50% |
| 2016 | 0.50% | 0.50% |
| 2017 | 0.50% | 1.00% |
| 2018 | 1.00% | 1.75% |
| 2019 | 1.75% | 1.75% |
| 2020 | 1.75% | 0.25% |
| 2021 | 0.25% | 0.25% |
| 2022 | 0.25% | 4.25% |
| 2023 | 4.25% | 5.00% |
| 2024 | 5.00% | 3.00% |
| 2025 | 3.00% | 2.25% |
Mortgage Rate Estimates (July 2026)
If you’re planning to buy or refinance, here’s a quick cheat sheet:
| Product | Estimate |
|---|---|
| 3-Year Fixed Rate | 3-Year Bond yield + 1% to 1.5% |
| Prime Rate | Bank of Canada rate + 2.2% = 4.45% |
| Variable Mortgage Rate | Prime – 0.5% to 1% |
| HELOC Rate | Prime + 0% to 2% |
Fixed rates move independently of the Bank of Canada. They follow bond yields, which reflect where markets think inflation is headed. Bond yields are still elevated because of oil price risk and Middle East uncertainty, which is why fixed rates have not come down even with the Bank on hold.
Variable rates only move when the Bank of Canada acts. They have not changed since October 2025 and will not change until the next decision. If a hike does come later this year, variable holders will feel it immediately. Fixed holders locked in today will not.
Example — July 2026:
3-year bond yield: ~2.95% → Fixed mortgage rates: ~4.00%
Prime rate: 4.45% → Variable mortgage rates: ~3.60%
How Different Toronto Properties Are Performing Right Now
Supply and demand vary sharply by property type. Condos continue to face oversupply from new completions and investor selling, which is weighing on prices and rents. Houses and multiplexes remain supply-constrained, with few motivated sellers and limited forced sales.
With policy changes supporting multi-unit housing, strong cash flows, and construction costs keeping a floor for houses, multiplexes continue to stand out as the most resilient investment segment in Toronto.
From a risk perspective, much of the downside has already occurred. Pricing has adjusted, expectations have reset, and returns are now driven more by actual income rather than future price appreciation. In this environment, performance depends less on market momentum and more on disciplined underwriting and execution.
Value-Add Opportunities: Better Returns, Lower Risk
Value-add opportunities are more attractive today for two key reasons.
First, prices are more stable after adjusting downward from their peaks. Large price swings increase the chance that gains from a value-add project can be wiped out, so lower volatility reduces this risk.
Second, the gap between project properties and finished values has widened compared to the peak, creating stronger and more reliable upside for investors.
With construction costs more predictable, returns now depend more on execution and income growth than on market timing. For houses and multiplexes, this leads to better value-add returns with lower and more predictable risk.
What Should Real Estate Investors Focus On Right Now?
This isn’t the time to bet on price appreciation. Instead, smart investors are focused on:
- Strong cash flow from day one
- Legal multi-units in stable, working-class areas
- Properties with laneway/garden suite potential
- Smart use of leverage while rates are easing
- Flexibility to refinance or exit
Canada’s 2026 Interest Rate Outlook and What It Means for Real Estate Investors
Rates have now held steady for six meetings in a row. The floor for this cycle looks set, and the next move is more likely to be a hike than a cut if energy driven inflation sticks around. For the rest of 2026, expect stability, not relief.
For Toronto multiplex investors, the math has not changed. Deals need to cash flow at today’s rates, not at rates you’re hoping for. Properties in supply-constrained, working-class areas keep performing regardless of what the Bank does at its next few meetings.
Want to see what’s possible for you? Book a strategy session with us here.
What Toronto Real Estate Investment Is Right For You?​​
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
