Canadian Mortgage Rates: Market Update for Buyers, Sellers & Investors
- Startritehomes.com
- 1 day ago
- 5 min read
Updated: February 2026
Canadian mortgage rates have eased from the extreme highs of 2023, but they remain well above the ultra-low “cheap money” era that defined the pre-pandemic years. As of February 2026, the Bank of Canada (BoC) policy rate sits at 2.25%, and most major lenders’ prime rate is approximately 4.45%.
For buyers, sellers, and investors across Canada, understanding Canadian mortgage rates today requires awareness of prevailing lending conditions, qualification rules, and market-level affordability constraints. It requires understanding how lenders assess risk, how the mortgage stress test limits borrowing power, and how different mortgage structures affect affordability, flexibility, and long-term risk.
Current Canadian Mortgage Rates – February 2026
Bank of Canada policy rate: 2.25%
This is the Bank of Canada’s target for the overnight rate, which influences short-term borrowing costs for financial institutions. While it has declined modestly from its peak, it remains above pre-2020 norms and continues to influence borrowing costs economy-wide.
Prime rate: ~4.45%
Used by lenders to price variable-rate mortgages and lines of credit. Some institutions apply a slightly higher internal prime for certain products.
*Quoted ranges reflect publicly advertised rates available to well-qualified borrowers and may not be available to all applicants*
Mortgage stress test rule: Borrowers must qualify at the higher of:
5.25%, or
Your contract rate + 2%
Example: If you are offered a 5-year fixed mortgage at 3.9%, the lender will assess affordability at 5.9%, not the contract rate. This stress test remains one of the most significant constraints on purchasing power in Canada.
What Lenders Are Offering Right Now
Best 5-year fixed mortgage (insured buyers): ~3.7%–3.9%
Best 5-year variable mortgage: ~3.4%–3.6%
Big banks: Often quote 4.3%–4.7% for fixed terms, depending on equity, credit profile, and term length
Pro Tip: The stress test can still reduce buying power by $50,000–$100,000 or more, even with lower contract rates. Full pre-approval remains essential before shopping.
Buyers: What “Higher-for-Longer” Still Means
Quick Takeaways
Lock in a 90–120-day pre-approval to protect against rate volatility
Shorter fixed terms (2–3 years) offer flexibility if further cuts arrive later in 2026
Entry-level demand remains strongest under $500,000, particularly outside Ontario and British Columbia
Pro Tip
Budget using your qualifying rate, not your contract rate
Compare banks, credit unions, and brokers—pricing gaps still exist
Regional Differences
Ontario & British Columbia: High prices combined with stress testing sharply limit purchasing power
Prairies (AB, SK, MB): Lower prices offset higher qualifying rates
Atlantic Canada: Better affordability, but rising insurance and utility costs matter
Northern Territories: Smaller markets with tighter underwriting standards
Sellers: Pricing and Presentation in a Rate-Constrained Market
Quick Takeaways
Buyers qualify for less—pricing accuracy is critical
Pre-listing inspections and energy-efficiency features improve buyer confidence
Mortgage assumptions (where permitted) can meaningfully improve listing appeal
Pro Tips
Price near common approval thresholds ($450k, $500k, $600k)
Offer closing-cost credits or rate buydowns rather than overpricing
Regional Differences
Ontario & BC: High-end listings move slowly; mid-market pricing must be aggressive
Prairies: Detached homes under $500k remain active
Atlantic Canada: Balanced conditions; seller flexibility often determines outcomes
Investors: Cash Flow, Risk, and Strategy
Quick Takeaways
Positive cash flow remains rare in Toronto and Vancouver
Alberta, Saskatchewan, and Manitoba continue to offer more viable rental yields
Many investors are laddering mortgage terms to spread renewal risk
Pro Tips
Stress test deals at contract rate + 2%, then add a buffer
On variable mortgages, model scenarios where prime returns above 5.5–6%
Regional Differences
Ontario & BC: Appreciation-driven strategies dominate
Prairies: Cash-flow opportunities still exist with conservative underwriting
Atlantic Canada: Healthy yields, but slower resale liquidity
Northern Territories: Niche opportunities with limited lender choice
Lender Landscape Snapshot
Best-case insured 5-year fixed: ~3.7%–3.9%
Best 5-year variable: ~3.4%–3.6%
Big-bank discounted rates: Mid-4% range
Pro Tip: The lowest rate is not always the best mortgage. Penalties, portability, and prepayment rules often matter more over time than small rate differences.
“Two-thirds of Canadians say they are at least somewhat likely to use a mortgage broker for their next mortgage.”— Mortgage Professionals Canada, 2025
Why Canadian Mortgage Rates Are Still Considered Elevated
While rates are significantly lower than in 2023—when many borrowers faced rates above 6%—they remain far above the 2–3% mortgages common between 2015 and 2020.
The Bank of Canada continues to signal caution. Inflation has moderated, but underlying price pressures and global uncertainty have slowed the pace of easing. This has kept Canadian mortgage rates anchored above historical lows.
Practical Playbooks
For Buyers
Secure a full pre-approval, not just a rate hold
Ask about portability if moving within a few years
Compare insured and uninsured options—insured rates may be lower but include CMHC fees
For Sellers
Prepare documents early (e.g., Real Property Report, condo status certificate)
Offer credits rather than price cuts to protect comparables
Highlight cost-of-living savings—efficient homes matter more than ever
For Investors
Mix mortgage terms to reduce renewal risk
Underwrite conservatively
Confirm zoning and bylaws in secondary markets
Provincial Snapshot
Ontario: Buyers constrained by stress test; longer days on market
British Columbia: Vancouver remains unaffordable; interior markets stabilizing
Alberta: Strong migration and relative affordability support demand
Saskatchewan & Manitoba: Balanced conditions; investment viability remains
Atlantic Canada: Cooling from pandemic highs; affordability intact
Northern Territories: Small, specialized markets with limited lender access
Forecast: The Road Ahead for Canadian Mortgage Rates
Some economists project the possibility of gradual rate reductions later in 2026; however, future policy decisions remain dependent on inflation, economic growth, and global financial conditions.
Estimated neutral rate: ~2.25%
Expected long-term mortgage “normal”: 4–5%, not a return to pandemic lows
Pro Tips
Make decisions based on today’s rates, not future hopes
Pay slightly more for flexibility if you anticipate moving or refinancing
Final Takeaway
Canadian mortgage rates in early 2026 reflect a new reality. They are no longer at crisis levels, but they are unlikely to return to the ultra-low environment of the last decade. Buyers must plan around qualification limits, sellers must price realistically, and investors must operate with discipline and conservative assumptions.
The opportunity is still there—but success now depends on strategy, preparation, and realism, not speculation.
*Rates are subject to change without notice. Figures reflect market conditions as of February 10, 2026 and are provided for general information only.
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Disclaimer
This content is provided for general informational purposes only and does not constitute financial, mortgage, legal, or investment advice. Mortgage rates, qualification criteria, and lending policies vary by lender and are subject to change without notice. Readers should consult licensed mortgage professionals, financial institutions, or legal advisors for advice specific to their individual circumstances.