Current overnight rate: 2.25% | Prime rate: 4.45% | Last updated: June 10, 2026
On June 10, 2026, the Bank of Canada held its overnight rate at 2.25% for the fifth consecutive meeting.
Prime rate stays at 4.45%. No change for variable mortgage holders or HELOCs.
The Bank is caught between two forces pulling in opposite directions. The conflict in the Middle East is now in its fourth month. Oil prices are running roughly $10 a barrel above the Bank’s April assumptions, pushing headline inflation up to 2.8% and expected to keep it near 3% in the near term. That would normally call for higher rates.
At the same time, Canada’s economy is weak. GDP edged down 0.1% in Q1 2026. Business investment remains soft, housing activity declined, and the unemployment rate is sitting in the 6.5% to 7% range. U.S. tariff uncertainty continues to weigh on exporters and business planning. That would normally call for lower rates.
Governing Council’s message was clear: they are looking through the war’s near-term impact on headline inflation, but they will not let higher energy prices become persistent inflation. If inflation broadens beyond energy, hikes are on the table. For now, they are watching and waiting.
📌 Next decision: July 15, 2026.
What This Means for Your Mortgage
Fixed rates have moved higher without the Bank doing anything. The five-year insured fixed sits at 4.04% today and the three-year insured fixed is also at 4.04%, pushed up by bond yields that are reacting to oil prices and inflation expectations. The 5-year Government of Canada bond yield is running near 3.1%. That move happened independently of the Bank.
Variable rates are lower at approximately 3.6% and remain the better number today. But they carry real upside risk for the rest of 2026. If oil prices stay elevated and core inflation starts to broaden, the Bank has signalled it will act. Variable holders would feel that immediately.
Bottom line: if you are closing a deal soon and want certainty, locking in at 4.04% fixed is reasonable. If you believe the economic drag from tariffs and weak growth will keep the Bank on hold, variable still makes sense. Just know the risk is tilted toward a hike, not a cut, for the rest of this year.
What the BoC is Actually Seeing Right Now
Inflation: CPI rose to 2.8% in April 2026, driven by higher oil prices and the impact of the carbon tax removal falling out of the annual comparison. Core inflation has actually moved down to around 2%, and the share of CPI components growing above 3% is near its historical average. The Bank expects headline inflation to hover near 3% in the near term before easing back toward 2%.
Growth: Canada’s economy contracted 0.1% in Q1 2026, weaker than expected. Consumer spending grew modestly but government spending declined unexpectedly. Housing activity fell, business investment stayed weak, and exports dropped while imports rose. Employment was up in May but is essentially flat since the start of the year, with the unemployment rate running between 6.5% and 7%.
Policy stance: The Bank is looking through the near-term inflation spike from energy prices but has drawn a clear line: if higher oil prices feed into broader inflation, it will hike. If trade headwinds hit growth harder than expected, cuts remain possible. The next move depends entirely on which of those forces wins out.
This is not a stable economy. It is one caught between a war-driven inflation risk and a tariff-driven growth risk at the same time.
Where Are Interest Rates Going in Canada?
Do not expect a rate boom.
Do not expect aggressive cuts either.
The most likely path is flat rates through the rest of 2026, with the next move driven by inflation data, not housing prices or growth alone.
If oil prices ease and core inflation stays anchored near 2%, the Bank holds or eventually cuts. If energy prices stay elevated long enough to push wages and other costs higher, hikes become the more likely next step. The balance of risk has shifted: most forecasters now put a hike as more likely than a cut for the second half of 2026.
| Bank | Now | Jul 2026 | Sep 2026 | Oct 2026 | Dec 2026 |
|---|---|---|---|---|---|
 |
2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
 |
2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
 |
2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
 |
2.25% | 2.25% | 2.25% | 2.25% | 2.25% |
 |
2.25% | 2.25% | 2.75% | 2.75% | 3.00% |
Last Updated: June 10, 2026.
Most banks are forecasting no change through 2026. TD, CIBC, BMO, and RBC all expect the Bank to hold at 2.25% for the remainder of the year, with the view that weak growth and trade uncertainty remove the case for moving in either direction.
Scotia remains the outlier, forecasting hikes to 3.00% by year-end. Their economist Derek Holt has argued the Bank should move sooner rather than later to avoid being forced into larger hikes later. Given what Macklem said today about not letting energy prices become persistent inflation, Scotia’s view is worth watching closely heading into July.
Bank of Canada Meeting Schedule
Wondering when the Bank of Canada will make its next move? The BoC announces rate decisions eight times a year. These dates are key for anyone watching interest rates or planning a real estate move.
| 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 | TBC | TBC |
| September 2, 2026 | TBC | TBC |
| October 28, 2026 | TBC | TBC |
| December 9, 2026 | TBC | TBC |
Historical Bank of Canada Interest Rates (2015–2025)
Rates don’t move in a straight line. Here’s how Canada’s overnight target rate has shifted over the past decade:
| 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 (June 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 + 1.5% |
| Prime Rate | Bank of Canada rate + 2.2% = 4.45% |
| Variable Mortgage Rate | Prime – 0.85% |
| 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. Right now bond yields are elevated because markets are pricing in the risk of a hike later in 2026. That is why fixed rates have risen even without the Bank moving.
Variable rates adjust only after the Bank of Canada acts. They have not moved since October 2025 and won’t change until the Bank does. If the Bank hikes later this year, variable holders will feel it immediately. Fixed holders locked in today will not.
Example — June 2026:
3-year bond yield: ~2.55% → Fixed mortgage rates: ~4.04%
Prime rate: 4.45% → Variable mortgage rates: ~3.6%
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 or 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 likely settled near their floor for this cycle. The Bank of Canada is not cutting again unless the economy deteriorates sharply, and the next move is as likely to be a hike as a cut. For the rest of 2026, the rate environment is stable but not improving. What that means for investors is simple: the window of better-than-normal cash flow and entry pricing is still open, but it is not getting wider.
In this environment, fundamentals matter more than timing. Properties that cash flow at today’s rates, in supply-constrained locations with strong tenant demand, are the ones that hold up regardless of what the Bank does next. That is what disciplined underwriting looks like right now.
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What Toronto Real Estate Investment Is Right For You?​​
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