The "Wait and See" Is Over: Bank of Canada Holds Rates at 2.25%
Date: December 11, 2025 | Category: Market Update, Mortgage Strategy | Reading Time: 4 Minutes
If you've been sitting on the sidelines waiting for mortgage rates to hit rock bottom, the Bank of Canada just sent a clear signal: we have arrived.
On December 10, 2025, the Bank of Canada announced it is holding its key overnight rate at 2.25%. After a year of aggressive cuts—dropping a full 1.00% in 2025 alone—the Bank has signaled that the easing cycle is likely over for now.
For homeowners and buyers in Surrey and Vancouver, this marks a critical pivot point. The era of "rapidly falling rates" is shifting to an era of "stability." Here is what this new reality means for your mortgage strategy in 2026.
The News Breakdown: Why the Pause?
Governor Tiff Macklem stated that the current rate of 2.25% is "at about the right level" to keep inflation near the 2% target while supporting the economy.
The Good News: The economy grew a surprisingly strong 2.6% in Q3. The recession fears that plagued early 2025 have largely subsided.
The Caution: With global trade uncertainty (specifically potential US tariffs) looming, the Bank is keeping some ammunition in reserve.
The Result: Prime rates at major banks will remain steady at 4.45%.
The "Golden Window" for Vancouver Buyers
While rates have stabilized, the real estate market is presenting a unique opportunity.
According to the latest Royal LePage Market Survey Forecast, home prices in Greater Vancouver are expected to dip approximately 3.5% in 2026. Why? Because inventory is currently hovering at decade highs.
This creates a rare "Golden Window" for buyers:
- Rates are Accessible: We are sitting at the bottom of the neutral range (2.25%).
- Prices are Softening: You have negotiating power that hasn't existed in years.
- Competition is Low: Many buyers are still waiting for "lower rates" that likely aren't coming.
Actionable Advice: Your 2026 Strategy
1. For Home Buyers: Don't Time the Absolute Bottom
The Bank of Canada is expected to hold this 2.25% rate through most of 2026. Waiting for another 0.25% cut might save you $40 a month, but it could cost you the chance to buy while prices are soft. When the market realizes rates have stabilized, buyer confidence will return, and that inventory will vanish.
2. For Renewals: The Fixed vs. Variable Debate
With the BoC pausing, variable rates will remain steady at Prime minus your discount (currently around 3.45% for many). However, fixed rates are actually starting to creep up. Bond markets are reacting to the economic strength, pushing yields higher.
Strategy: If you value sleep, a 3-year fixed rate might be the sweet spot right now before bond yields push them higher.
Opportunity: Remember, if you have an uninsured mortgage, you can now switch lenders at renewal without passing the stress test. Do not sign your bank's renewal letter without letting us shop the market for you.
3. For Investors: Watch the "Stress Test"
Rumors are circulating that OSFI (the banking regulator) is considering replacing the stress test with a "loan-to-income" limit later in 2026. While this isn't official yet, it could drastically change borrowing power for investors with multiple properties. We are monitoring this closely.
The Bottom Line
The falling knife has hit the floor. Rates are stable, the economy is resilient, and the Vancouver market is on sale.
Unsure if you should lock in or ride the variable wave in 2026?
About Varun Chaudhry
Licensed mortgage broker with over 18 years of experience in the Canadian mortgage industry. Specializing in MLI Select, construction financing, and self-employed mortgages across BC, AB, and ON.