The Bank of Canada's New Forecasting Model Puts Your Mortgage Renewal Front and Centre
The Bank of Canada has started using a new model, called Prima, that tracks how borrowing costs reach households as mortgages renew. What that tells owners about timing.
The short version
- The Bank of Canada began using a new projection model, Prima, in September 2026, according to a staff paper published 1 October.
- Prima tracks how changes in interest costs feed through to outstanding mortgage debt as borrowers renew or refinance.
- The Bank's own earlier research found mortgage payment changes differ widely by product, so your renewal date and mortgage type matter.
- You cannot forecast the central bank, but you can know your own renewal date and prepare early.
What the Bank announced
The Bank of Canada has begun using a new model to build its forecasts. Called Prima, it entered use in September, according to a staff analytical paper published on 1 October by Donald Coletti, Martin Kuncl, Martin Harding, Dmitry Matveev, Tolga Özden and Yang Zhang.
The Bank describes Prima as its new model for projection and policy analysis, building on the foundations of earlier models while adding detail on how pressures in individual sectors affect production costs and pass through to consumer prices. The paper is posted on the Bank's site as Staff analytical paper 2026-47.
For homeowners, the interesting part is what Canadian Mortgage Trends reports about its household and housing channels. The model takes a closer look at how mortgage payments, housing supply and business costs affect spending and inflation.
How the model treats mortgages
According to that summary of the paper, Prima does three things that touch your finances:
- It tracks how changes in interest costs feed through to outstanding mortgage debt as borrowers renew or refinance.
- It distinguishes between households in different financial circumstances, capturing how mortgage payments, income and borrowing constraints influence spending.
- It connects rental and ownership demand with construction, home prices and shelter inflation.
The paper's findings, as described, include that increases in the central bank's key setting initially push up mortgage interest costs while easing other ownership costs as housing demand and construction cost pressures weaken. Rent inflation responds more slowly, because new supply and the rents on existing leases take time to adjust.
The Bank says it uses the model to develop its baseline forecasts and to assess alternative scenarios, alongside staff judgment and other tools.
Why renewal is where it reaches you
Most Canadian mortgages are not repriced when the central bank moves. A fixed-term mortgage keeps its pricing until the term ends, and a variable one adjusts according to its own terms. That means the effect of a change in borrowing costs arrives household by household, at renewal. It is why a model of the economy now needs to know who is renewing and into what.
The Bank's own earlier research shows how uneven that is. In a July 2025 staff note, How will mortgage payments change at renewal?, staff estimated that about 60% of outstanding mortgages would renew in 2025 or 2026. Under that note's assumptions at the time, about 60% of those renewing were expected to see a payment increase. Holders of five-year fixed mortgages renewing in 2025 or 2026 could see an average increase of around 15% to 20% compared with their December 2024 payment, while those with variable mortgages and variable payments could see an average decline of around 5% to 7%.
We looked at a related Bank of Canada finding in our piece on renewals and home equity, and at the variable-mortgage side in CMHC's renewal risk research.
What this means for your timing
A new model does not make the Bank's next decision any easier to call. The next scheduled announcement is 28 October. What it does underline is that, for a household, the number that matters most is not the central bank's setting on any given day. It is your own renewal date and what is on offer when it arrives.
- Know your date. Find the maturity date on your mortgage statement and put the 120-day mark on your calendar. Our explainer on the 120-day window covers what your lender can and cannot do.
- Know your product. A fixed mortgage and a variable one respond to changing borrowing costs in different ways. The variable discount arithmetic shows how.
- Compare early. Staying with your lender can be right, and switching lenders means a new application and stress test. Both options should be priced before your offer expires.
- Test the payment. Run your own numbers in the mortgage calculators at a few different outcomes and make sure you are comfortable with the high end.
What not to read into it
A forecasting model is a tool for the central bank, not a prediction for your mortgage. It does not tell you which way the next announcement will go, and nothing in the paper changes how a lender prices your renewal. The summary available to us is also secondhand, and the full paper is technical. If you want the detail, read the Bank's own documents.
If you would like a second set of eyes on a renewal coming up, start with our Mortgage Renewal page, or book a conversation.
Nearly thirty years in Canadian financial services, based in Waterloo Region and working across Ontario. Most people are handed a product — you deserve a plan.
The Financial Collective is a mortgage planning practice serving clients across Ontario. Figures from Bank of Canada research are dated estimates under stated assumptions and say nothing about any individual mortgage. All mortgage applications are subject to lender approval and satisfactory review of credit, income and property. Product features and pricing are subject to change without notice and vary by lender, term and borrower qualification.
Sources: Bank of Canada, Prima: The Bank of Canada's New Projection and Policy-Analysis Model, Staff analytical paper 2026-47 (Oct 2026) · Canadian Mortgage Trends, BoC's new forecasting model puts more focus on mortgages and housing (1 Oct 2026) · Bank of Canada, How will mortgage payments change at renewal? An updated analysis, Staff analytical note 2025-21 (July 2025)