Trying to plan a mortgage renewal beyond the next year can feel like guessing. But long-range forecasts from Canada’s major banks and economics teams do offer a helpful baseline: many expect the Bank of Canada (BoC) policy rate to sit near today’s “neutral” range through 2026, with a gradual drift higher in 2027 under some scenarios.
Why the BoC policy rate matters for your mortgage
The BoC policy rate directly influences variable mortgage rates and indirectly affects fixed mortgage rates through bond markets and investor expectations. Forecasts are not guarantees, but they can help you stress-test your budget and decide how much rate risk you’re willing to carry.
Where economists cluster for 2026
Across forecasts cited by True North Mortgage, a common theme is a hold around 2.25% through 2026, though some teams see increases arriving before year-end.
- TD Economics: average policy rate around 2.25% in 2026, holding longer-term
- National Bank: 2.25% through 2026
- RBC: 2.25% until end of 2026
- BMO: 2.25% through 2026 (and 2027)
- Oxford Economics: 2.25% through 2026
- Scotiabank/CIBC: potential rise toward 3.0% by end of 2026
What this means in plain language: if inflation behaves and growth stays steady, forecasters see room for a relatively stable policy rate in 2026. But there is a meaningful “upper” scenario where rates push higher faster.
What changes in 2027 (the year more forecasts start to diverge)
Several outlooks introduce rate hikes in 2027, but the size and timing vary:
- National Bank: 2.50% in Q1 2027, then 2.75% in Q2 2027, holding through 2027
- Desjardins: hikes in Q3 2027 to 2.50% and Q4 2027 to 2.75%
- Capital Economics: rise to 2.75% in 2027
- RBC: rise to 3.25% by end of 2027 (a higher path than most)
- Scotiabank/CIBC: 3.0% by end of 2026, holding through 2027
In other words, the “center of gravity” for forecasts is still in the mid‑2% to around 3% range for 2027, but there’s enough disagreement to justify planning for more than one outcome.
What could push rates off track
True North Mortgage notes that most forecasts assume relatively constructive outcomes on major economic variables. But several wild cards could change the path quickly.
- Trade and tariffs: uncertainty around trade relationships (including CUSMA renegotiation) can impact growth and inflation
- Energy shocks: oil price spikes can feed inflation and complicate central bank decisions
- Geopolitical risk: conflict can affect supply chains, commodity prices, and business confidence
These factors can cut both ways: they might raise inflation (supporting higher rates) or dampen growth (supporting lower rates). That’s why forecasts often shift over time.
How to use 2026–2030 forecasts in real mortgage decisions
Long-term rate outlooks are most useful for budgeting and risk management, not for trying to time the exact lowest rate.
- If you’re choosing fixed vs. variable: consider whether you could handle payments if rates drift toward ~3% (or higher) over the next couple of years.
- If you renew in 2026–2027: run scenarios for “hold” and “hike” paths; don’t rely on one forecast.
- If you’re buying now: qualify your purchase with a cushion so you’re not forced to sell if renewal rates surprise to the upside.
- If you want flexibility: compare prepayment terms and penalties—rate forecasts matter less if your mortgage is costly to break.
Practical takeaway: Treat 2.25% as the “baseline” policy-rate story for 2026, but plan your mortgage budget for a higher 2027 scenario (roughly 2.75% to 3.25%) so a modest hiking cycle doesn’t derail your finances.