The Bank of Canada’s Rate Hold Was a Closer Call Than It Looked
The Bank of Canada held its benchmark rate at 2.25% in April – leaving prime at 4.45% – its fourth consecutive decision to stay put. Information released this week shows the decision was less straightforward than the headline suggests.
Policymakers discussed a range of views on the most likely path for rates, with the Iran conflict and an ongoing review of the Canada-US-Mexico Agreement creating competing pressures. Oil prices have remained elevated, with Brent crude trading above US$100 per barrel. Desjardins now forecasts headline inflation peaking at roughly 3.1% year-over-year in the second quarter – slightly above the Bank of Canada’s own 3% projection.
BMO senior economist Sal Guatieri described the Bank as being “on hold for the foreseeable future,” but flagged real risk on both sides: a further economic deterioration could prompt cuts, while sustained oil prices feeding into core inflation could trigger hikes. The hold is expected to extend into 2027 under the base case, though that view is increasingly data-dependent.
What this means for your mortgage: Variable rates are stable and have been since last fall. Fixed rates are creeping up as bond yields respond to inflation risk and global uncertainty. If you are choosing a term right now, locking into a five-year fixed at a premium while the Bank of Canada is on hold – with rate cuts still a possibility if the economy softens further – is a bet worth understanding before you make it. That does not mean variable is automatically the right call. It means the decision deserves more than a default.
CMHC Confirms: Borrowers Are Moving Away From the Five-Year Fixed
A new Canada Mortgage and Housing Corporation report confirms a significant shift in how Canadians are choosing their mortgage terms. By February 2026, variable-rate mortgages accounted for 42% of new extended mortgages at chartered banks – the most popular option. Just 11% of borrowers chose a traditional five-year fixed term.
The shift reflects both lower variable rates and continued uncertainty about where fixed rates are headed. CMHC says variable rates fell below fixed rates in late 2025 for the first time since 2022.
The renewal wave that defined the past two years is expected to ease: CMHC forecasts 13% fewer renewals in 2026 than in 2025 as the bulk of pandemic-era mortgages have already rolled over. Interest rates on renewals also dropped from roughly 4.8% in January 2025 to 4.2% by January 2026, reducing payment shock for borrowers renewing now.
The stress, however, has not disappeared. Toronto’s 90-plus-day delinquency rate rose 45% year-over-year in Q4 2025. Ontario’s overall delinquency rate climbed to 0.23%, overtaking the national average for the first time since at least 2012. CMHC deputy chief economist Aled ab Iorwerth noted that “pockets of significant stress still exist beneath the surface, particularly in areas like Toronto and Vancouver.”
Following OSFI’s 2024 decision to remove the stress test for uninsured borrowers switching lenders at renewal, uninsured mortgage switches rose 34% between the second half of 2024 and the second half of 2025.
What this means for your mortgage: If you are renewing in 2026, do not sign your lender’s offer without getting a second opinion first. The borrowers who had their renewal reviewed and switched where it made sense outperformed those who signed the first offer – by a measurable margin. The stress test no longer applies when switching lenders at renewal on an uninsured mortgage. Call me before you sign anything.
Ontario Consumer Insolvencies Hit Their Highest Level Since 2009
New data from the Office of the Superintendent of Bankruptcy shows 37,121 Canadians filed for consumer insolvency in Q1 2026 – the highest quarterly figure since the depths of the 2008-2009 financial crisis. That works out to roughly 17 filings per hour across the country, every hour, for three months.
Ontario recorded 13,913 consumer insolvency filings in Q1, a 14.7% increase year-over-year. For the twelve months ending March 31, 2026, consumer insolvencies were 4.2% higher than the equivalent period a year earlier, suggesting the trend is not a seasonal blip.
Wesley Cowan, a licensed insolvency trustee and vice-chair of the Canadian Association of Insolvency and Restructuring Professionals, described the pattern: “The concern is that many households are entering this next period of economic uncertainty already carrying debt they can no longer comfortably manage.”
Consumer insolvency is rarely the result of a single event. It tends to follow months or years of sustained pressure – rising carrying costs, exhausted savings, and credit lines that have been drawn down to keep mortgage payments current. Mortgage arrears are typically one of the last things to go.
What this means for your mortgage: The households in that insolvency data did not wake up one morning in crisis. They got there gradually – maxing credit, drawing down savings, keeping the mortgage current while everything else slipped. By the time insolvency is the only option, the window to use home equity as a restructuring tool has usually closed. If you are carrying high-interest debt alongside your mortgage and feeling that pressure, the time to look at the numbers is now – while you have equity, a clean payment history, and lenders willing to work with you. That window does not stay open indefinitely.
The Bottom Line
Variable rate holders are in a stable position for now – the Bank of Canada is expected to hold through 2026 barring a significant shift in inflation or trade conditions. If you are renewing, do not sign your lender’s offer without calling me first. And if you are carrying high-interest debt alongside your mortgage, get a number on what consolidation looks like while you still have the equity and the credit standing to act on it.
Call or text 249-480-1249 or visit HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources
- Bank of Canada Governing Council summary of deliberations, April 29, 2026 (Bloomberg / CMT News, May 13, 2026; Canadian Mortgage Professional, May 13, 2026)
- Desjardins Economic Report: Iran conflict inflation outlook (CMT News, May 15, 2026)
- CMHC Spring 2026 Residential Mortgage Industry Report (CMT News, May 12, 2026; Canadian Mortgage Professional, May 12 and May 14, 2026)
- Office of the Superintendent of Bankruptcy Q1 2026 consumer insolvency data, via Canadian Association of Insolvency and Restructuring Professionals (Canadian Mortgage Professional, May 11, 2026)
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