Canada Holds Interest Rate at 2.25%: Should Newcomers Wait Before Making a Big Purchase?

To put this into perspective, the current 2.25 percent rate is much lower than that 5.0 percent rate that Canadians faced at the peak of Canada’s fight against post-pandemic inflation from July 2023 through June 2024.

However, we’re also significantly higher than the extraordinarily low 0.25 percent interest rate during the peak of COVID-19 from 2020 through 2022. So, compared to the recent past, today’s rates are moderate and relatively stable.

Unfortunately, that’s about the only thing that’s stable in the Canadian economy these days.

If you’re a newcomer to Canada, you might be wondering if now is a good time to make a large purchase, like purchasing a new home or car, or starting a new business. Rates are stable, but the economy is not. In this article, we’re going to put the BoC interest rate into perspective and help you understand if now is the right time for a big purchase.

Key Takeaways

• The Bank of Canada has kept its interest rate at 2.25 percent for the seventh consecutive decision.
• Borrowing costs are lower than they were in 2023 and 2024 (5.0 percent), but higher than during the record-low interest rates during the pandemic years (0.25 percent).
• The Bank of Canada rate is not the sole factor in determining the rate of a mortgage, car loan or business loan in Canada.
• For newcomers planning a major purchase, trying to predict the next interest rate decision is less useful than focusing on how much financial flexibility you’ll have if economic conditions get worse.

Why Is the Bank of Canada Keeping Interest Rates Steady?

The Bank of Canada’s interest rate has been sitting at 2.25 percent since October 2025, and there is a simple explanation for the reluctance to move: Canada’s economy is sending a lot of mixed signals.

Canada’s economy has been unsteady. In June, the country was thought to have entered a technical recession, meaning that GDP declined for two consecutive quarters. However, just last week, new economic data revealed that the Canadian economy reversed course and grew 3.3 percent in the second quarter of 2026. As well, first quarter figures were revised upward, meaning that the “technical recession” – it never actually happened.

At the same time, Canada and the United States have been ratcheting up a trade war, with new tariffs and retaliatory measures poised to increase the cost of exports and imports on both sides of the border. Increased cost of goods contributes to inflation and is one reason why the Bank of Canada is hesitant to increase rates.

Taking an even bigger picture approach, long-term economic uncertainty abounds: U.S. threats to impose a 50 percent tariff on Canadian autos, the volatile global energy market, and the ongoing impacts of artificial intelligence. Meanwhile, global oil prices remained elevated as the US-Iran conflict continues.

Whether you’re the Bank of Canada trying to decide interest rates, or you’re just a regular guy living in Waterloo and trying to decide if now is the right time to buy a car, we’re all facing decisions mired in uncertainty.

So – Is This a Good Time to Make a Big Purchase?

Let’s leave the global economic portrait behind us and zoom in on what this means for your wallet.

Nobody knows with certainty where interest rates will be six months or a year from now. Economists and financial markets can make predictions, but those expectations can change quickly when the economic outlook changes. Two months ago, financial experts were predicting we would see three rate cuts in 2026, yet after the latest BoC decision, experts are predicting zero cuts for the remainder of 2026. The Canada-U.S. trade dispute is a good example of how quickly things can change.

So, if you’re considering a major purchase, waiting solely in the hopes that the Bank of Canada will cut rates again could mean waiting for a change that isn’t coming.

Instead, there’s a better question to ask:

Could you comfortably afford this purchase today if your financial situation got a little weaker? Imagine what would happen if interest rates increased, or your income changed, or inflation inched up.

If any of those situations mean you wouldn’t be able to afford a loan payment, then it might not be the right time to take out a loan. But – it’s a bit more complicated than that, and your answer is also going to depend heavily on what you’re buying.

What If You Want to Buy a Home?

If you want to buy a home in Canada, the Bank of Canada rate is important, but there are a few other factors to consider, too.

First, are you planning to take a variable rate mortgage or a fixed rate mortgage?

Variable mortgage rates move with lenders’ prime rates, which are heavily influenced by the Bank of Canada rate. That means changes from the Bank can have a direct impact on how much you have to pay for your monthly mortgage.

Fixed mortgage rates work differently. With a fixed rate mortgage, your interest rate and regular payment amount stay locked in for a fixed term. If you’re concerned about economic volatility, choosing a fixed rate mortgage can give you piece of mind in your monthly budgeting, at least until the end of your term.

Moving2Canada has a deeper explanation of how interest rates affect homebuyers in Canada.

It’s also important to keep in mind that interest rate changes impact more than mortgage rates, they also impact demand and supply in the market. With rates relatively high, the housing market has remained slow in most cities and home prices are relatively low. Generally, when rates drop, more people jump in to buy homes, which often leads to higher prices. So, timing your home purchase to an interest rate decision may not necessarily save you money in the long run.

If you’re ready to buy, it makes more sense to focus on the deal available to you today. Get a mortgage pre-approval, compare lenders, and make sure the monthly payment comfortably fits within your budget, even if conditions change.

If you can, leave yourself some breathing room, a little financial buffer. Buying less than the maximum amount you qualify for and building an emergency fund can give you flexibility if rates rise, or your mortgage renews at a higher rate, or your employment situation changes.

What If You Want to Buy a Car, or Start a Business?

If you want to buy a car or start a business, the approach is similar to taking out a mortgage.

Yes, the Bank of Canada’s interest rate is going to influence your borrowing cost, but the actual rate offered to you for a car or business loan is going to depend on several factors. This includes your credit history, the lender, the length of your financing term, and more.

First, you have to assess the offer. Are you getting a favourable rate from your lender?

Next, you have to consider your ability to manage this loan if conditions change. What if interest rates go up? Or your employment changes?

Should You Wait for Interest Rates to Fall?

We can’t make that decision for you in this article. There’s a chance rates could fall in the future. But, with all the uncertainty in the world, there’s also a chance they could move higher.

That uncertainty is precisely why trying to perfectly time a major financial decision around the Bank of Canada can be difficult.

The current rate environment is much friendlier to borrowers than the one Canada experienced a few years ago. At the same time, the economic outlook remains hard to predict, especially as Canada-U.S. trade tensions continues to escalate. The BoC itself repeatedly emphasizes the high uncertainty surrounding Canada’s economic future.

For newcomers, that makes financial flexibility a key value. If you can comfortably afford the home, car or business loan at today’s rates, while keeping enough savings to handle a few surprises, today’s uncertainty doesn’t mean you need to put your decisions on hold.

But, if the numbers only work if the interest rate stays at this exact level, or if you’re counting on interest rates falling soon, that’s a reason to give yourself a little more time.

Today’s unfortunate economic reality is that the only certainty is uncertainty.