Bank of Canada Holds at 2.25% as Canada’s Housing Market Finds Its Footing
Updated July 19, 2026 · 9-minute read
The rate held. The market moved—slightly.
On July 15, the Bank of Canada kept its overnight rate at 2.25%.
On the same day, the Canadian Real Estate Association reported that national home sales rose 0.5% from May to June, following stronger gains in May and April.
June sales were now roughly 7% above March, while the national benchmark home price was flat month over month for the first time since January 2025.
That combination matters more than either headline alone.
It does not mean Canada has entered a new housing boom. It does not mean every mortgage rate is about to fall. And it definitely does not mean buyers should rush.
It means the national market is beginning to look less frozen: borrowing costs are no longer changing at every Bank of Canada meeting, sales activity has improved for three months, inventory has tightened modestly, and prices have stopped sliding nationally—at least for one month.
For buyers, sellers and homeowners approaching renewal, the useful question is not “What will rates do next?” It is: What decision becomes possible now that the picture is a little clearer?
What happened on July 15
The Bank of Canada left the overnight rate at 2.25%, with the Bank Rate at 2.50% and the deposit rate at 2.20%. The Bank said the Canadian economy was showing improvement after a soft start to the year, while inflation remained above target but was expected to move back toward 2% in early 2027.
The Bank’s July outlook estimated Canadian GDP growth of 0.7% in 2026 and 1.8% in both 2027 and 2028. It also described housing activity as weak but stabilizing—a phrase that fits the latest resale data unusually well.
CREA’s June numbers showed
- national home sales up 0.5% month over month;
- actual sales up 0.9% from June 2025;
- new listings down 1.3% from May;
- the MLS® Home Price Index flat month over month and down 3.6% year over year;
- an average sale price of $696,078, up 0.5% year over year;
- 4.8 months of inventory, the lowest reading of 2026; and
- a sales-to-new-listings ratio of 50.2%, still inside CREA’s national balanced-market range of 45% to 65%.
In plain English: more homes changed hands, fewer new listings arrived, and the national price index stopped falling—but buyers still had meaningful choice. That is stabilization, not acceleration.
A Bank of Canada hold is not a promise that every mortgage rate will hold
This distinction is where many rate headlines go wrong.
Variable-rate mortgages and home equity lines of credit are generally influenced by lender prime rates, which tend to respond to changes in the Bank of Canada’s overnight rate. When the Bank holds, the prime-rate input usually holds too.
The Bank of Canada’s July 15 data showed the typical chartered-bank prime rate at 4.45%.
Fixed mortgage rates work differently. They are priced more heavily from bond yields, lender funding costs, competition, borrower risk, mortgage insurance, amortization and product features.
A central-bank hold can help calm the rate environment without forcing fixed rates to remain unchanged.
The Bank of Canada’s posted-rate table showed typical big-bank posted rates on July 15 of 5.49% for one year, 6.05% for three years and 6.09% for five years.
Those are posted reference rates, not a list of the best discounted rates available to every borrower.
Your actual options can differ substantially based on the property, down payment, loan-to-value ratio, qualification profile and transaction type.
The practical takeaway is simple: do not choose fixed or variable from one macro headline. Compare the real products available for your scenario, including penalties, prepayment privileges and the payment risk you can comfortably carry.
Why three months of improving sales matters
One positive month can be weather. Three consecutive monthly gains deserve attention.
National home sales rose 0.9% in April, 5.5% in May and another 0.5% in June. That does not erase a difficult period, but it suggests some buyers who had been waiting are beginning to transact.
At the same time, new listings fell in June and months of inventory declined to 4.8. Neither measure is tight enough nationally to signal a broad seller’s market. Together, however, they show that the pool of available homes is no longer growing faster than demand.
This is the kind of market where preparation becomes more valuable than prediction. A prepared buyer can act when the right property appears without treating every listing as an emergency.
An unprepared buyer may discover that a promising headline did not improve their qualifying amount, closing cash or tolerance for payment changes.
National balance can hide very different local markets
Canada does not have one housing market.
CREA reported that year-over-year benchmark prices remained lower in British Columbia, Alberta and Ontario, with Nova Scotia also moving into negative territory. Conditions can diverge even more sharply by city, neighbourhood, property type and price band.
A balanced national sales-to-new-listings ratio of 50.2% can coexist with bidding pressure for a well-priced starter home in one neighbourhood and months of sitting inventory for a condo or luxury property a few kilometres away.
So use the national numbers to understand the backdrop—not to price a specific home or decide how aggressively to bid. Local comparable sales, days on market, active competition, property condition and financing constraints still decide the transaction.
What buyers should do now
1. Build the payment before you build the offer
Run the price, down payment, rate, amortization, taxes, condo fees and closing costs together. A comfortable monthly payment matters more than the maximum purchase price a calculator will display.
Use our mortgage payment calculator to compare scenarios, then check the result against your actual household budget.
2. Separate “qualified” from “comfortable”
Lender qualification is a credit decision. Your comfort level is a life decision. Leave room for repairs, utilities, insurance, childcare, transportation and the possibility that the next renewal rate is different.
Our affordability calculator is a starting point—not a substitute for a reviewed application.
3. Get the file reviewed before the property becomes urgent
A serious mortgage pre-approval should do more than produce a number. It should identify documentation gaps, explain conditions and show which assumptions could change the result.
4. Compare mortgage structure, not just the headline rate
A lower rate can be expensive if the mortgage has a restrictive penalty, weak portability, limited prepayments or conditions that do not fit your plans. Ask what happens if you sell early, refinance, receive a windfall or need to move.
What renewing homeowners should do now
1. Start early enough to have choices
Waiting for the renewal letter can compress the decision into a few days. Begin comparing roughly 120 days before maturity, or earlier if your income, credit or property situation has changed.
2. Price the status quo
Before switching lenders, understand your existing balance, remaining amortization, offered rate, payment frequency, prepayment terms and any fees. Then compare the total borrowing cost and flexibility, not just the new payment.
Use our renewal comparison calculator and review our mortgage renewal options.
3. Decide whether certainty or flexibility is more valuable
If a payment change would strain the household, certainty may be worth more than the chance of future savings. If your cash flow can absorb variation and you may move or refinance, flexibility can matter more. There is no universally correct term or rate type.
What sellers should do now
The June data supports cautious confidence, not aspirational pricing.
With national prices flat month over month and buyers still holding meaningful choice, the first two weeks on market remain important. Price against recent local sales and current competition.
Prepare the property and documents before launch. If you are also buying, model the financing and timing of both transactions before accepting conditions that could make the second half difficult.
Most of all, do not turn a national “sales are rising” headline into a neighbourhood price forecast. The data says activity is improving; it does not say every property has gained value.
The next date to watch
The Bank of Canada’s next scheduled rate announcement is September 2, 2026. Between now and then, inflation, employment, economic growth and global financial conditions can all change the outlook.
You do not need to predict that meeting to make a strong mortgage decision today.
You need a plan that still works if rates stay where they are, a version that works if they rise, and a clear understanding of what you would change if they fall.
The bottom line
Canada’s housing market appears to be finding its footing, but footing is not momentum.
The Bank of Canada has held its policy rate. Sales have improved for three months. Inventory has edged lower. National prices have stopped declining for one month. Those are constructive signals—but the market remains balanced nationally and uneven locally.
That is a good environment for disciplined decisions: budget before bidding, compare before renewing and price for the street—not the headline.
Want a mortgage comparison built around your actual numbers? View current mortgage options or talk with the Pragmatic Mortgage Lending team.
This article is general information, not financial or legal advice. Mortgage availability, qualification and pricing vary by borrower, property, lender and market conditions.
MLS® and Multiple Listing Service® are trademarks owned by the Canadian Real Estate Association.
