Mortgage Rate Update: No News Is Good News

July 15, 2026

Bank of Canada Mortgage Rate Update – July 2026

The Bank of Canada left its overnight rate unchanged at 2.25% today, which means bank prime rates will also remain where they are.

Good news for variable-rate mortgages and HELOC clients

At first glance, today’s announcement may seem fairly uneventful. But beneath the rate hold, the Bank’s tone has become noticeably more optimistic, particularly around inflation.

Canada’s economy is beginning to improve. Growth has resumed, consumer spending has remained solid, and inflation is expected to gradually return to the Bank’s 2% target. 

All of which is good news, but we’re not out of the woods yet.

The inflation risk from the Middle East and the economic uncertainty surrounding CUSMA negotiations are what’s keeping the Governor from pressing the rate-decrease button.

So if the outlook is improving, why are fixed rates not changing?

Let’s dive into today’s press release and figure out why.

Key Points From Today’s Press Release:

Over the past year, economic growth was choppy and eventually stalled, while the employment market has remained relatively soft.

That suggests there is still considerable slack in the economy. In plain English, there are workers available, businesses have unused capacity, and the economy is not yet operating at full speed.

That is a key data point for the fixed mortgage rates. Slack in the economy keeps wage growth under control, which keeps inflation at bay.

However, the Bank now sees clear signs that growth resumed during the second quarter and estimates the economy expanded at an annualized rate of approximately 2.5%.

Some of that growth reflects the reversal of temporary factors that held the economy back earlier in the year. More importantly, the sources of growth appear to be broadening.

Consumer spending remains solid, exports have begun to recover and business investment is expected to gradually improve.

Housing activity has remained weak, although the Bank believes it may finally be stabilizing. 

An interesting side note: the Bank is rarely disappointed when home prices cool, because rising housing wealth tends to encourage spending…but I’ll save that rabbit hole for another post!

A Recovery, Not a Boom

Despite the stronger second quarter, the Bank is not expecting rapid economic growth.

It projects that Canada’s economy will grow by just 0.7% in 2026, followed by growth of 1.8% in both 2027 and 2028.

That is enough to gradually absorb some of the economy’s excess capacity, but it is not the type of growth that would normally require the Bank to slam on the brakes.

This is another reason Prime is likely to remain unchanged through the rest of 2026.

The Government’s spending of our tax dollars is expected to contribute to the recovery, while the oil and gas industry should support business investment in the short term. 

If you listen closely at night, you can hear the party music from Alberta once again. 

The Bank also noted that businesses are becoming better at navigating tariff and trade uncertainty.

Apparently, uncertainty becomes slightly less intimidating once you have been living with it long enough!

What About Inflation?

Headline inflation rose to 3.2% in May, which made the possibility of further rate cuts more complicated.

However, most of that increase came from higher gasoline prices linked to the conflict in the Middle East.

When gasoline is removed from the calculation, inflation was approximately 2.2%. The Bank’s preferred measures of core inflation also remained close to its 2% target.

That distinction is important.

The Bank generally tries not to react too aggressively to inflation caused by a temporary spike in one volatile category, particularly when there is still weakness elsewhere in the economy.

Inflation is expected to remain elevated in June before gradually easing over the coming months and returning to approximately 2% in early 2027.

Of course, that forecast depends heavily on oil and gasoline prices.

The Middle East remains volatile, and the Bank acknowledged that the path for global inflation will largely depend on how the conflict unfolds.

So, while the Bank believes inflation is heading in the right direction, it is not ready to take its eye off the road.

Which is why Tiff and company are “more talk than action” these days.

The United States Is Still Complicating Things

The US economy continues to grow at approximately 2.5%, supported by strong consumer spending and booming investment in artificial intelligence.

The Bank noted that the AI build-out is now supporting economic activity in a growing number of countries.

Meanwhile, China’s economy continues to expand on the back of strong exports, while growth in Europe has been constrained by higher energy costs.

The Bank expects global economic growth to slow to approximately 2.75% in 2026, then improve in 2027 and 2028.

Financial markets have also remained relatively strong, with global stock markets rising since the Bank’s April update. 

However, US bond yields have increased while Canadian yields have remained relatively unchanged.

That difference has contributed to a weaker Canadian dollar and matters for mortgage borrowers because Canadian fixed mortgage rates can be influenced by the US bond markets even when Bank of Canada’s overnight rate stays the same. 

This is why fixed rates can sometimes remain sticky, even when the Bank of Canada leaves rates unchanged or gives positive guidance.

Where Do Rates Go From Here?

Today’s announcement did not sound like the Bank is preparing to cut rates in the immediate future.

But it didn’t sound particularly eager to raise them either.

The Bank believes the current policy rate is appropriate to support the economic recovery while bringing inflation back toward 2%.

That suggests the Bank is comfortable staying exactly where it is while it watches the economy, inflation and global events develop.

Unless inflation becomes more persistent or economic growth accelerates considerably, the most likely path appears to be an extended period of rate stability.

After several years of rapid rate cuts, then aggressive increases, trade uncertainty, oil shocks and changing forecasts, a little stability may not be such a bad thing?!

What Does This Mean For Your Mortgage?

Variable rate borrowers will see no change to their payments or interest costs following today’s announcement.

Fixed mortgage rates will continue to move independently, depending on Canadian bond yields, oil prices and developments in the United States.

If tensions in the Middle East ease and oil prices retreat, it should create more room for lenders to reduce fixed mortgage rates. 

Bottom line? For anyone purchasing, renewing or refinancing, the decision should not be based solely on trying to predict the Bank of Canada’s next move.

The better question is whether your mortgage strategy fits your cash flow, future plans and comfort level with uncertainty.

Rates may not be moving today, but that doesn’t mean your mortgage strategy should be standing still!

Have a wonderful summer and we’ll be back in September!

The next Bank of Canada meeting is September 2nd, 2026

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Disclaimer Notice: The views expressed in this blog post are based on our opinion. The information has been sourced from the Bank of Canada and several Canadian news sources. Any forecasts or expectations of the direction of interest rates are based on the collective experience of the Nishka Riley Mortgage Team, and as such, any recommendations must be taken within the context of your personal situation. As with any forecast, there is no way to guarantee the outcome of the real estate market or interest rates, nor is a guarantee implied.