January 28, 2026
The Bank of Canada held its overnight policy rate at 2.25% this morning. No surprise there. The surprise, if you can call it that, is how clearly the Bank Bank of Canada is saying: the rate might be steady, but the world around it is not.
If you are a buyer, a seller, or you have a mortgage renewal coming up, here is what you will understand by the end of this post:
Why the Bank stayed put today
Why fixed mortgage rates can stay elevated even when the overnight rate does not move
What this likely means for Greater Victoria decisions over the next few months
What the Bank of Canada actually said
The Bank’s statement reads like a checklist of “steady, but fragile.”
Growth is expected to be modest: the Bank projects 1.1% growth in 2026 and 1.5% in 2027.
Inflation is close to target: December CPI inflation came in at 2.4%, and the Bank expects inflation to stay close to 2% over the horizon.
The labour market is still soft: unemployment is 6.8%.
Trade uncertainty is the cloud over everything: US tariffs and an upcoming Canada–US–Mexico Agreement review are singled out as major risks.
They also note global conditions are “accommodative overall,” the Canadian dollar has been pushed above 72 cents with recent US dollar weakness, and global growth is expected to average about 3%.
Bottom line: the BoC thinks the current rate is “appropriate,” but they are keeping both hands on the wheel.
What BCREA has to say (and why it matters for mortgages)
The BCREA commentary hits a point I see people miss all the time - The overnight rate is not the whole story for mortgage pricing.
BCREA’s angle is basically this:
The data late in 2025 came in a bit stronger than expected, which pushed market expectations toward a possible 2026 hike.
But the headwinds (trade restrictions, uncertainty, global volatility) make actual tightening unlikely.
Even if the Bank stays on hold, mortgage rates can remain elevated relative to the overnight rate because investors demand a bigger risk premium in medium and long-term yields - which sounds technical, the real-life translation is simple:
You can have a steady central bank rate and still have lenders price mortgages cautiously, especially on the fixed-rate side.
BCREA has also been pretty direct in their broader materials that variable rates have already come down with prior cuts, but that without more cuts, the road ahead is more “hold and wait” than “cheaper borrowing.”
What other economists are saying today
The dominant theme from economists and market watchers is uncertainty management.
Reuters reported that Governor Tiff Macklem emphasized how hard it is to forecast the next move in an environment shaped by trade tension and geopolitical risk. In that same coverage, Doug Porter (BMO) framed the Bank as looking “comfortable” where it is, while Andrew Kelvin (TD Securities) highlighted the increased focus on uncertainty, particularly tied to the US and trade files.
This all lines up with what a lot of forecasters have been leaning toward going into this decision: a prolonged pause as the base case.
What this means for mortgages in plain English
Variable-rate mortgages
Variable rates are still the ones most directly linked to the Bank of Canada’s moves through prime.
So a hold usually means:
No immediate change to what variable-rate borrowers are paying.
No sudden new affordability shock.
But lenders can still adjust pricing at the margins. Not usually dramatic, but worth watching if you are rate shopping or your renewal date is coming up.
Fixed-rate mortgages
Fixed rates are more tied to bond yields and market expectations about risk and inflation.
So even with the overnight rate flat:
Fixed rates can stay stagnant or move up/down based on bond markets, not the Bank’s announcement headline.
This is exactly where the BCREA “risk premium” point matters. If markets are jittery about trade, inflation persistence, or global volatility, long-term borrowing costs can stay higher than people expect.
If you want to see what today’s rates mean for your monthly payment, my payments and affordability tools can help.
What it means for buyers in Greater Victoria
If you're a buyer right now and you feel like the math keeps shifting even though the rate didn't change, you're not imagining it. Fixed rates don't follow the Bank of Canada in a straight line, and that disconnect is frustrating when you're trying to lock down a budget. The good news is that stability, even imperfect stability, makes planning possible.
A steady rate environment gives you something valuable: you can stop guessing. Your pre-approval and budgeting feel less like moving targets. You can spend more energy on the home itself (location, layout, strata docs, sunlight, parking, future flexibility) instead of obsessing over whether rates will spike next month.
The trade-off is that if fixed rates remain sticky, some buyers will still feel payment pressure. That tends to keep the market more selective. Well-priced, well-presented homes will get action. Homes that feel overpriced or require too much imagination will sit.
If you're buying this spring, I would think in terms of preparedness over prediction. Be clear on your payment comfort zone before you start looking. Keep your financing options open (term length, fixed vs variable, portable features) so you're not locked into one scenario. And have a realistic Plan B if the perfect home shows up before the perfect rate does. Sometimes the right house at 4.5% beats waiting six months for 4.2% and losing the house you actually wanted.
Ready to move forward? I keep my Buying Guide updated with clear steps for first-time buyers, move-up buyers, and downsizers, step by step, no jargon..
What it means for sellers
For sellers, rate stability helps, but it does not do the selling for you.
A steady policy rate:
reduces the risk of buyers suddenly disappearing due to a surprise hike,
it does not guarantee urgency.
In a market like Greater Victoria, where buyers can be picky even in good years, the fundamentals keep winning:
sharp pricing,
clean presentation,
clear positioning (who is this home for, and why will they choose it).
If fixed rates stay elevated, buyers tend to scrutinize value harder. The homes that feel “easy to say yes to” are the ones that move.
If you’re thinking about selling this year, the first step is getting a realistic value range based on today’s market.
My overall take
Today’s decision feels like the Bank saying: we are on pause, but we are not relaxed.
BCREA’s framing is what I think homeowners and buyers should keep in mind: even if the Bank holds all year, mortgage rates do not have to drift down in a neat, friendly line. Markets can price in uncertainty, and lenders follow.
The next scheduled rate announcement is March 18, 2026.
Sources:
https://www.bankofcanada.ca/2025/12/fad-press-release-2025-12-10
https://www.bcrea.bc.ca/economics/market-recovery-continues-at-an-uneven-pace-across-bc/
https://www.reuters.com/world/americas/view-bank-canada-holds-benchmark-interest-rate-225-2026-01-28/
https://www.wsj.com/articles/bank-of-canada-stands-pat-on-rates-warns-of-heightened-uncertainty-b2fae2b2
https://www.benefitsandpensionsmonitor.com/news/industry-news/bank-of-canada-stands-still-while-trade-politics-move-the-goalposts/
