Today, the Bank of Canada announced it would maintain its overnight rate at 2.75% for the third consecutive meeting, citing persistent core inflation above 3%, resilient employment, and uncertainty around an upcoming U.S. trade agreement deadline of August 1.
While the decision was widely anticipated, it reinforces the central bank’s cautious “wait‑and‑see” stance. Inflation has stabilized near the BoC’s target range (1–3%), but ongoing trade tensions could inflict further economic stress if a deal is not reached.
With the overnight rate unchanged, prime rates remain elevated (around 4%), reflecting no immediate change for variable mortgages. Analysts expect at least two rate cuts before the end of 2025—potentially lowering variable rates by 0.5% or more.
Most fixed-rate renewals in 2025–2026 face payment increases:
60% of borrowers renewing in this cycle—mostly five-year fixed mortgages—are expected to see hikes, averaging 10–20% higher monthly payments relative to December 2024.
Home sales rose in seven provinces during Q1 2025—particularly in affordable regions—though national numbers lag due to Ontario and BC underperformance. Sales momentum depends heavily on resolution of U.S. trade tariffs.
Buyers:
A rate hold offers short-term stability—if you’ve been paused by concerns over rising rates, now may be the time to act.
Explore fixed vs. variable mortgages with a broker to assess your best fit in light of possible upcoming rate cuts.
Sellers:
Stable borrowing costs and rising buyer interest in lower‑priced markets may give you an edge—consider listing before renewed demand raises prices and competition.
Renewing Homeowners:
If you’re approaching renewal, expect higher payments, especially for five-year fixed terms.
Get a free home evaluation to explore refinancing, or check out current listings as part of your planning.
Two main developments will shape the rest of 2025:
Trade negotiations with the U.S., with August 1 serving as a key deadline for tariffs or resolution.
Inflation trends—a sustained decline could pave the way for September/October rate cuts to 2.50% and possibly lower,
The BoC’s rate hold suggests short-term stability but no relief for fixed borrowers.
Variable-rate borrowers stand to benefit if the projected cuts materialize.
Home sales are cautiously optimistic—demand is growing where prices are reasonable, but broader recovery depends on trade clarity.
Get a free home evaluation – see what your property is worth in today’s market.
Explore current listings – find homes that fit your budget and timeline.