Did you feel that? A collective sigh of relief, perhaps, as Canada’s latest inflation numbers dropped. On February 17, 2026, the news hit: January’s annual inflation rate unexpectedly cooled to 2.3%.
It’s a big deal, and it’s got a lot of homeowners in places like Toronto, Mississauga, and Oakville wondering what’s next for their mortgage payments. We’ve been doing this since 1988, and we know a thing or two about economic shifts like this.
Photo by Daven Froberg on Unsplash
Table of Contents
- The Latest Numbers: What Happened?
- Bank of Canada’s Stance: January’s Hold and March’s Outlook
- Rate Cut Hopes: What Analysts Are Saying
- So What Does This Actually Mean for Your Mortgage?
- Considering Your Options: Variable vs. Fixed
- Looking Ahead: Your Next Steps
- Frequently Asked Questions
Key Takeaways
- Inflation Cools: Canada’s January 2026 inflation dropped to 2.3% year-over-year.
- BoC Held Steady: The Bank of Canada maintained its policy interest rate at 2.25% in its January 28, 2026, announcement.
- Rate Cut Expectations: Market analysts are now anticipating one to two Bank of Canada rate cuts in 2026.
- March Announcement: The next BoC decision on March 18, 2026, will be key, with this new inflation data heavily influencing their choice.
The Latest Numbers: What Happened?
Let’s break this down. Canada’s Consumer Price Index, or CPI, which is our official measure of inflation, came in at 2.3% year-over-year for January 2026. This data, released on February 17, 2026, was a bit of a surprise to many. Most economists were expecting something a little higher, maybe closer to 2.5% or even 2.8%.
But here’s the thing: 2.3% is much closer to the Bank of Canada’s target of 2%. And when inflation gets closer to that sweet spot, it gives the Bank of Canada more room to manoeuvre with interest rates. That’s why everyone’s talking about potential rate cuts now.
Bank of Canada’s Stance: January’s Hold and March’s Outlook
Just before the inflation numbers dropped, on January 28, 2026, the Bank of Canada made its first interest rate announcement of the year. They held their policy interest rate steady at 2.25%. No change. Their statement at the time highlighted some ongoing uncertainty about where inflation was truly headed, and they were cautious.
But now, with this fresh, cooler inflation data in hand, things look a little different. The next Bank of Canada interest rate announcement is scheduled for March 18, 2026. You can bet this new 2.3% inflation figure will be a major topic of discussion for them. Understanding how mortgage rates are determined and where they’re headed is crucial for every homeowner.
Rate Cut Hopes: What Analysts Are Saying
Before this inflation news, many market analysts were a bit more hesitant about predicting significant rate cuts in 2026. Some thought maybe one, maybe none. But the January 2026 inflation data has definitely shifted the conversation. Now, some are pricing in one to two rate cuts for the year.
And that’s huge. A Bank of Canada rate cut forecast changes the whole game for variable-rate mortgage holders and anyone thinking about renewing or refinancing. It’s not a guarantee, mind you, but the odds are looking better.
So What Does This Actually Mean for Your Mortgage?
Bottom line, if you’re an Ontario homeowner with a variable-rate mortgage, or if you’re coming up for renewal soon, this news is generally positive. A rate cut would directly translate to lower interest payments for you. Think about it: a small drop in the Bank of Canada’s overnight rate usually means a similar drop in your prime-linked variable rate.
Let’s look at some examples for folks in the GTA:
| Mortgage Amount | Current Payment (Estimate) | Potential New Payment (Estimate)* | City Example |
|---|---|---|---|
| $500,000 | $3,000 | $2,900 | Whitby |
| $750,000 | $4,500 | $4,350 | Vaughan |
| $1,000,000 | $6,000 | $5,800 | Toronto |
*Estimates are illustrative and depend on specific mortgage terms and actual rate changes.
That extra $100 or $200 a month can make a real difference in your budget, whether you’re in Hamilton, Markham, or Ajax. With potential rate cuts on the horizon, many Ontario homeowners might be wondering when is the right time to refinance their mortgage to take advantage of lower rates and potentially reduce their monthly payments.
For those approaching their mortgage renewal, understanding the current economic climate and the Bank of Canada’s stance is vital for making informed decisions about renewing their mortgage.
Considering Your Options: Variable vs. Fixed
This news definitely makes variable rates look more attractive for some homeowners. If you’ve been on the fence, or if you’re currently in a variable mortgage, the prospect of lower rates could mean significant savings. But remember, variable rates come with their own set of risks, as we’ve all seen in the past few years.
And that’s why it’s always a good idea to consider your personal comfort level with risk. For homeowners with variable-rate mortgages, or those considering one, the prospect of rate cuts highlights the importance of understanding the implications of fixed or flexible mortgages. While the prospect of lower interest rates is appealing, it’s also important to consider why the lowest interest rate isn’t always the best fit for every homeowner’s long-term financial strategy.
Looking Ahead: Your Next Steps
So, what should you do with this information? Don’t just sit there and hope for the best. This is the time to be proactive. If you’re nearing a mortgage renewal, or if you’re thinking about buying a home in Richmond Hill or Burlington, it’s smart to explore your options.
We’ve been helping folks in Brampton and across Ontario since 1988, and we’ve got over 40 lender relationships. That means we don’t just offer you one bank’s rates; we shop around for you. When seeking the most favorable terms for your mortgage, understanding the benefits of choosing a mortgage broker versus a traditional bank can be highly advantageous for Ontario homeowners. We can help you understand what this 2.3% inflation rate could truly mean for your specific situation and help you find the best mortgage rates in Canada.
Frequently Asked Questions
1. When is the next Bank of Canada interest rate announcement?
A: The next Bank of Canada policy rate announcement is scheduled for March 18, 2026. This meeting is highly anticipated by homeowners and analysts, as the recent drop in January’s inflation to 2.3% is expected to be a major factor in whether the Bank decides to hold or cut interest rates.
2. Will Canadian mortgage rates go down in 2026?
A: While not guaranteed, the outlook for 2026 is increasingly positive. Following the surprising January inflation data, many market analysts are now forecasting one to two interest rate cuts this year. If the Bank of Canada lowers its overnight rate, variable-rate mortgage holders and those renewing soon will likely see lower interest costs.
3. How does the 2.3% inflation rate affect my mortgage in Ontario?
A: A lower inflation rate (closer to the Bank of Canada’s 2% target) gives the Bank more “room to manoeuvre.” For homeowners in cities like Brampton, Hamilton, or Toronto, this cooling inflation suggests that the peak of high interest rates has passed, making it an ideal time to review renewal strategies or consider refinancing to lower monthly payments.
4. Should I choose a fixed or variable mortgage rate right now?
A: With potential rate cuts on the horizon for 2026, variable rates are becoming more attractive as they allow you to benefit immediately from any Bank of Canada decreases. However, fixed rates offer stability. The right choice depends on your personal risk tolerance and how much you value potential savings versus a guaranteed payment.
5. Is now a good time to refinance my mortgage in the GTA?
A: Yes, with inflation cooling to 2.3%, it is a proactive time to explore refinancing. By working with a mortgage broker to compare over 40 lenders, you can determine if the current trend toward lower rates makes it financially beneficial to break your current term and secure a lower rate before the next Bank of Canada announcement.
Got questions? Contact us today or call 905-455-5005. No pressure, no obligation.
About the Author: Aman Harish
Aman Harish is a Co-Owner and Mortgage Broker at Canadian Mortgage Services. With over 14 years of experience in the Canadian lending landscape, Aman specializes in helping homeowners and buyers develop proactive renewal strategies and optimize their debt structure in challenging economic climates. His commitment is to ensuring clients not only secure the best rates but also build long-term financial resilience.
