January 2021 Bank of Canada Interest Rate Update

January 20, 2021

The Bank of Canada keeps the overnight interest rate unchanged at 0.25%. The retail prime rate will stay at 2.45% (2.60% at TD bank). For the latest rates, check out our rates page here.

Key points from the Bank of Canada January 2021 announcement:

  • The Bank of Canada maintained the overnight lending rate at 0.25%, which means no change to the retail prime rate of 2.45% (2.60% TD).
  • A high degree of uncertainty due to the pandemic. Predicting economic recovery is conditional on the path of the virus.
  • BoC anticipates a contraction in Q1 2021 due to the current lockdowns with a sharp rebound in Q2.
  • Projections that the earliest we can see a full recovery will be in 2023. In the meantime, low rates and support to the Canadian economy will continue.



New year, new hope, rates will continue to stay at historic lows.

This morning the Bank of Canada held their first meeting of 2021.

Despite some new speculation and hints that the central bank might consider “micro-cuts” they held steady with their current policy rate of 0.25%.

Aside from making policy decisions, the BoC meetings are important to help us understand and project how things are unfolding for the Canadian economy.

The overall outlook is optimistic that the economy will recover. However, there is a lot of short-term uncertainty and risk due to the pandemic.

You can read the Bank of Canada’s full press release here.

What does this mean for you?

The prime rate on your mortgage and lines of credit will remain unchanged at 2.45%.

Fixed rates will remain low at their current historic levels below 2.00% for the foreseeable future.

Low-interest rates have been a major driver of the CRAZY year for GTA real estate sales and prices. With rate risk, very low many are anticipating that 2021 will carry the momentum from last year.

For more information about mortgage financing and to discuss any specific requests please book a call directly into my calendar here below.


Full Transcription

Chris: [00:00:00] It’s a new year, new hopes and dreams, but when it comes to interest rates, it looks like they’re going to stay low for all of 2021. This morning, the Bank of Canada met for the first time. And I want to share with you some of the highlights of that meeting. So first off, and probably most importantly, the bank has committed to keeping the prime rate unchanged.

Chris: [00:00:21] So the overnight lending rate is a quarter of a percent. And that means that the prime rate on your mortgage will stay unchanged at 2.45% or 2.6% if you’re with TD Bank. But no change currently. And furthermore, they have reinstated and confirmed their commitment to this 4 billion dollar per week quantitative easing program. And what this effectively does is it keeps fixed-rate mortgages also at their current historic low levels.

Chris: [00:00:52] The Bank of Canada then went on to project how they see the economic recovery progressing in 2021. At the end of 2020, we saw a lot of recovery from the ground that we lost in earlier in the year with a lockdown. And things were looking quite rosy with the vaccination rollout. Things were quite positive. But as we begin the new year and with the current lockdowns, all bets are off. And really it’s a story of how this virus progresses. How it affects us here in Canada will ultimately determine how the economic recovery unfolds.

Chris: [00:01:30] At the moment, the bank is projecting that for Q1 2021, we will actually see a contraction of the Canadian economy due to the lockdowns, but then we’ll see a very strong recovery and bounce back in Q2. What I found particularly interesting about the bank’s report this morning is their projection as to when we will finally get back to normal. At the moment, all things considered, and of course, understanding that this virus can have legs and take us in places that we don’t expect, the bank does expect that we will be back to prepend levels in 2023. In the meantime, the bank has reaffirmed its commitment to Canadians to support the economy along by keeping interest rates low and doing this 4 billion dollar per week quantitative easing program. 2021 is going to be another interesting year for us.

Chris: [00:02:26] And if you need the support of a mortgage broker or any guidance relating to how interest rate decisions are affecting your life, I’m just a phone call or an email away. Reach out any time I look forward to being in touch with you for the next meeting. Bye for now.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.