Bank of Canada Rate Update: What It Means for Mortgage Borrowers

On January 28, 2026, the Bank of Canada held its target for the overnight rate at 2.25% (Bank Rate 2.50%, deposit rate 2.20%). This rate influences prime rates, which directly impacts variable mortgages and HELOCs.

What Changed (and What Didn’t)

• Overnight rate target: held at 2.25%.
• Bank Rate: 2.50%.
• Deposit rate: 2.20%.
• Prime rate: typically unchanged when the overnight rate is held (lenders may still adjust independently).

If you’re in a variable mortgage or HELOC, Bank of Canada decisions can affect your interest costs quickly.

What This Means for Variable Mortgages and HELOCs

Variable mortgages and HELOCs usually move with your lender’s prime rate. When the overnight rate is held, your rate typically stays the same — but it’s still a signal about the direction of policy and the risk of changes ahead.

• Variable mortgage: your interest rate usually stays the same when the BoC holds.
• HELOC: typically priced at prime plus/minus; holding means no immediate change for most borrowers.
• Payment behaviour: depending on your product, payments may stay flat while interest allocation changes, or payments may adjust.

What This Means for Fixed Mortgage Rates

Fixed mortgage rates are driven more by bond yields and market expectations than by the overnight rate alone. A hold can still influence sentiment, but fixed rates don’t automatically follow the BoC decision one-for-one.

Practical Takeaways

• If you’re renewing soon: compare fixed vs variable using penalty risk and timeline, not just rate.
• If your budget is tight: consider whether payment certainty matters more than potential savings.
• If you’re planning renovations or debt consolidation: map out the financing structure and the exit strategy.

Next Scheduled Announcement

The next scheduled date for announcing the overnight rate target is March 18, 2026. We update this page after each rate announcement.

Related reads: Fixed vs Variable: How to Choose in Canada • Second Mortgage Explained • Renovation Financing Options • Mortgage Calculators •