Understanding the Bank of Canada’s Role: How Interest Rate Changes Affect Your Montreal Mortgage

Have you ever wondered why your mortgage payment changes or why it’s suddenly harder to buy a house in Montreal? It often starts with a group of people in Ottawa called the Bank of Canada.

Think of the Bank of Canada like the “referee” of our economy. Their job is to keep prices from rising too fast (which is called inflation). To do this, they use something called the policy interest rate.

What Just Happened?

In January 2026, the Bank of Canada decided to keep the interest rate at 2.25%. They didn’t move it up, and they didn’t move it down. This is called a “hold.” After a lot of changes in 2025, they want to see how the economy handles the current rates.

How This Hits Home in Montreal

In our city, this affects you in two main ways depending on what kind of mortgage you have:

• Variable-Rate Mortgages: If your mortgage rate moves up and down with the bank, you are likely feeling a bit of relief. Since rates have dropped from the highs we saw a couple of years ago, your monthly payment is likely lower than it used to be.
• Fixed-Rate Mortgages: This is where it gets tricky. If you signed a 5-year fixed deal back in 2021 when rates were very low, you might be renewing your mortgage this year. Even though rates are “holding” now, they are still higher than they were five years ago. This means your new payment could go up by 15% to 20%.

Is it a Good Time to Buy or Sell?

Montreal is a unique market. Right now, things are a bit calmer than the “bidding war” craziness of the past.

• For Buyers: With rates staying steady, it is easier to plan your budget. You don’t have to worry about rates jumping up the day after you buy.
• For Sellers: Buyers are feeling more confident because they know what their payments will look like. This means more people are out looking at homes in neighborhoods like Plateau, Rosemont, and the West Island.

What Should You Do?

If your mortgage is coming up for renewal in 2026, don’t wait until the last minute! Talk to a professional to “stress-test” your budget. It’s always better to know your new number early so you can plan for a great year ahead in this beautiful city.