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Fixed Mortgage Rates Slip Below 4% as Bank of Canada Holds Steady
The best insured five-year fixed rate has dropped back under 4 per cent this month, giving some homebuyers a modest affordability boost even as the central bank keeps its policy rate unchanged
Published: July 14, 2026
Canadian borrowers renewing or shopping for a mortgage this month are getting a small piece of good news: the best available five-year fixed rates have dipped back below the psychologically important 4 per cent threshold. As of mid-July, the leading insured five-year fixed rate stood at roughly 3.94 per cent, with three-year fixed offers running slightly lower, around 3.84 per cent, and five-year variable rates near 3.25 per cent, according to rate-comparison sites tracking dozens of lenders.
The dip comes even though the Bank of Canada has held its benchmark lending rate at 2.25 per cent since October of last year, resisting pressure to move in either direction as it juggles a mixed economic picture. Inflation has actually ticked higher recently, with the Consumer Price Index rising 3.2 per cent year over year in May, but the central bank has signalled that the increase, driven mostly by energy costs, does not yet justify a change in policy.
Instead, the recent easing in fixed rates appears to be driven more by bond market moves and lender competition than by anything the Bank of Canada has done directly, since fixed mortgage rates typically track government bond yields rather than the overnight rate. Mortgage brokers say that competition among lenders has intensified this summer as fewer Canadians are actively shopping for new mortgages, pushing some banks to sharpen their pricing to win market share.
For homeowners with variable-rate mortgages, the calculus is different. With the Bank of Canada's key rate unchanged, variable rates have stayed roughly flat, meaning most of the affordability relief this summer is flowing specifically to fixed-rate borrowers, particularly those renewing five-year terms taken out during the low-rate years of the pandemic.
Forecasters caution that the window for sub-4 per cent fixed rates may not stay open indefinitely, particularly if inflation continues to run hotter than the Bank of Canada's 2 per cent target through the rest of the summer.
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