As Canada navigates an evolving economic landscape, the outlook for interest rates and mortgage costs is anything but uniform. The country’s major financial institutions are sending divergent signals about the future of the Bank of Canada (BoC) policy rate – and this holds major implications for home buyers, mortgage holders and renewers alike. Let’s unpack what these forecasts mean for you, and how you can stay ahead in the mortgage game.
1. Diverging Forecasts from Canada’s Big Banks
According to a recent summary on interest-rate outlooks among the “Big 6” Canadian banks, there is no consensus on where the BoC will head in 2026.
* Some banks (such as Bank of Montreal – BMO) expect further rate cuts, potentially bringing the overnight rate closer to ~2.00 %.
* Others, such as Scotiabank, are more hawkish, projecting the rate might rise to ~2.75 % by the end of 2026.
* Mid-range estimates from banks like Royal Bank of Canada (RBC) or Toronto‑Dominion Bank (TD) suggest a hold around ~2.25 %.
Why the split? It comes down to differing assessments of inflation, labour-market strength, trade risks, and global monetary policy spill-overs.
2. Why Borrowers Should Care – Mortgage Impacts
The BoC policy rate doesn’t move in isolation. It drives the prime rate, influences variable-rate mortgages, and sets expectations for fixed-rate indices. Because of this:
* If the BoC cuts rates, variable-rate mortgage holders may see relief — lower payments, more flexibility.
* If the BoC instead holds or even raises rates, variable borrowers face rising costs, making timely renewals or refinancing decisions even more important.
* Fixed-rate products depend on bond yields and long-term inflation expectations; divergent bank forecasts signal those yields may not uniformly trend lower, limiting how much fixed rates may drop.
In short: your mortgage strategy must adapt to uncertainty.
3. What is an “Easing Cycle Nearing Its End”?
When analysts say the BoC’s easing (rate-cutting) cycle is approaching its finish line, they mean:
* Major cuts have already been delivered; many “low-hanging” relief moves are behind us.
* With inflation still lurking, and the labour market showing signs of deceleration, the central bank is less comfortable cutting aggressively.
* The divergence in forecasts signals that some banks believe we’ve hit (or are close to) the bottom, while others still see room for at least one more cut.
This uncertainty matters for home-buyers and renovators — though rates may not suddenly soar, neither can borrowers reliably count on big drops.
4. Actionable Steps for Mortgage Borrowers & Home Buyers
A. Review your renewal timeline.
If your mortgage term is up for renewal in the next 6-12 months, engage early. With uncertainty around whether rates will go down, staying proactive gives you more room to act.
B. Variable vs Fixed: Choose based on your comfort and the forecast split.
* If you lean variable: You may benefit from any further cuts, but face more risk if holding occurs.
* If you prefer fixed: Recognize your rate may not collapse, so locking a favourable rate now may make sense.
C. Keep an eye on inflation and labour-market signals.
When the BoC highlights a “soft” job market or sticky inflation (as it has lately) it hints at less room for cuts.
D. Consider partner guidance.
A qualified mortgage broker — like Ash Khan — can help interpret these shifting forecasts and align your financing strategy with your goals, whether you’re buying your first home, renewing, or upgrading.
5. The Take-Away: Be Strategic, Not Reactive
While headline rates might seem in flux, the smartest mortgage borrowers will treat this as an opportunity — not a time to wait passively. With big banks offering split futures and the BoC signalling caution, your best move is to stay informed, act early, and lean on expert advice.
By aligning your mortgage decisions with the bigger picture — and recognizing that the easing cycle might be wrapping up — you position yourself not just as a borrower, but as a strategic homeowner or investor. When you’re ready, reach out to Ash Khan to explore how today’s forecasts translate into your next move.