A lot of my posts lately have been about mortgage rates. Tomorrow the Bank of Canada is making their rate announcement, which impacts variable mortgage rates. I’m a mortgage broker in Alberta and here’s what I expect is going to happen.

Bank of Canada Likely to Hold Rates

Going into this week’s Bank of Canada announcement, a rate hold looks very likely.

Inflation is still under control overall. Canada’s Consumer Price Index recently came in at 2.4%, which is below expectations. Even more important, the Bank’s preferred core inflation measures are sitting close to 2% and trending lower when you look at recent months.

At the same time, we’re seeing a spike in global energy prices. Normally, that would push inflation higher, but so far it hasn’t fully filtered through the broader economy. There are a few reasons for that.

Economic growth is slowing. Consumers and businesses are more cautious, and spending has softened. Lending conditions are tighter, which is also cooling demand. Even shelter costs, which were a major driver of inflation over the past few years, are now easing.

Higher energy costs are also acting like a brake on the economy. When people spend more on fuel and heating, they have less money for everything else.

Put it all together, and it gives the Bank of Canada a reason to wait rather than react too quickly.

Rate Cuts Still on the Table

Even though rates are likely holding for now, I still believe the next move from the Bank of Canada will be a cut, not a hike.

Earlier this year, markets were expecting multiple rate increases. That thinking has shifted. Investors are no longer pricing in hikes for 2026, and that’s a big change.

The reason: slowing inflation, like weaker demand and tighter credit, tend to last longer than short-term spikes in oil prices. Unless energy-driven inflation becomes widespread and persistent, the Bank will likely look through it.

That said, there is still uncertainty. A lot depends on global events, including how long geopolitical tensions last and whether energy markets stabilize.

Fixed Mortgage Rates

Fixed mortgage rates are being driven by Government of Canada bond yields, and lately those yields have been moving around without a clear direction. That’s why fixed rates have been holding steady overall.

If you’re considering a fixed rate right now, you should be prepared for some short-term volatility. Rates can move quickly when bond markets react to new economic data or global news.

When I’m working with clients, the most common choice continues to be between a three-year and a five-year fixed rate. If the pricing between those two options is close, I generally think the five-year offers better value. It gives you longer-term stability and protects you if rates stay higher for longer than expected.

Variable Mortgage Rates

Variable rates haven’t changed much recently, but the gap between fixed and variable is starting to widen again. As fixed rates feel pressure from rising bond yields, variable rates are becoming more attractive from a cost perspective.

My current view is that variable rates are still likely to deliver the lowest total borrowing cost over a five-year period. But there’s a trade-off.

Variable rates come with uncertainty. Payments or costs can change, and we’ve already seen how quickly things can shift when global events impact inflation expectations. If you’re considering a variable rate, you need to be comfortable with that risk and have room in your budget to handle higher costs if they come.

What I’m Telling My Clients Right Now

Most of the clients I’m working with today are choosing fixed rates, and I understand why. There’s a lot of uncertainty in the world right now, and fixed rates offer peace of mind. You know exactly what your payment will be, and that stability matters.

At the same time, I’m still having plenty of conversations about variable rates, especially with clients who have flexibility in their budget and are thinking longer term.

If you value certainty and want to remove risk, fixed rates are a strong option. If you’re comfortable riding out some ups and downs in exchange for potential savings, a variable rate can still make sense. Here’s another post about how to choose between the two.

Advice for Alberta Homebuyers

The Bank of Canada is likely holding rates, inflation is easing overall, but global factors like energy prices are still creating uncertainty. That combination is what’s driving the mixed signals you’re seeing.

If you’re buying, renewing, or refinancing, this is a time to focus less on trying to perfectly time the market and more on choosing a mortgage strategy that fits your situation. That’s exactly what I help my clients do every day.

If you want to talk through your options or see what makes the most sense for you, I’m always happy to help. Book a free, no obligation consultation.