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March 2026 BoC Announcement

Variable mortgage rates will remain stable for the foreseeable future, as the Bank of Canada (BoC) kept its benchmark borrowing rate on pause in its March announcement. This marks the third consecutive rate hold from the bank, which has maintained its rate at 2.25% since October 2025.

As a result, the prime rate set by Canada’s banks will stay at 4.45%. There is also no anticipated change for variable mortgage rates, the lowest of which is currently priced at 3.35% for a five-year term.

This most recent rate hold is of little surprise to markets and economists, as the Bank faces ongoing pressures from tariffs, and new geopolitical complications from the war in Iran. The latter has caused energy prices to spike which – if prolonged – could cause inflation to grow at an unsustainable rate. Given it’s a key mandate of the BoC to keep inflation growth within a 2% target, this could prompt the central bank to hike rates again in the future, despite signs of an otherwise weakening economy.

However, in its announcement, the Bank was clear that it remains in “wait-and-see” mode, given it’s too early to see how the Middle Eastern conflict will impact Canada. Policymakers will want to see clear evidence that inflation is rising and becoming entrenched – meaning higher prices will be the new normal – before increasing interest rates again.

“Against this overall backdrop, the Governing Council decided to maintain the policy rate at 2.25%. With recent data pointing to weaker economic activity and uncertainty elevated, risks to growth look tilted to the downside. At the same time, inflation risks have gone up due to higher energy prices,” states the Bank’s press release accompanying the rate announcement.

“We will continue to assess the impact of US tariffs and trade policy uncertainty, and how the Canadian economy is adjusting. We are also monitoring the unfolding conflict in the Middle East closely and assessing its impact on growth and inflation. As the outlook evolves, we stand ready to respond as needed.”

The impact on variable-rate mortgage borrowers

If you already have a variable mortgage rate, today’s announcement means nothing will change in terms of your interest rate, payment size, or the portion of your payment going toward your principal mortgage amount. However, those shopping for a variable rate should lock in fast as it’s not guaranteed that lenders won’t change their spread to prime.

The impact on fixed-rate mortgage borrowers

Fixed mortgage rates, while not directly impacted by the Bank’s rate decisions, are still under considerable upward pressure, as it becomes less likely that both the Canadian and American central banks will lower rates in the near future. Bond yields, which lenders use to set the pricing for fixed mortgage rates, have steadily increased since February, leading some lenders to increase their fixed mortgage rates. Borrowers who are shopping for a fixed rate, or who are coming up for renewal on their existing mortgage term, are wise to take out a pre-approval and rate hold in order to secure access to today’s rate pricing.