Canadian Mortgage Rates Hold Steady — But For How Long?

It’s the kind of calm that makes homeowners and hopeful buyers a little uneasy. Canadian mortgage rates stayed steady this week — no major movements from the big banks, and no surprises from the Bank of Canada (BoC). But underneath that stability, economists say there’s growing tension. The kind that usually breaks with a shift.

So, is this the breather before a real rate drop — or the calm before another storm?

Let’s break it down.

Why Mortgage Rates Aren’t Moving (Yet)

Back in June, the BoC held its key overnight lending rate at 2.75%, pausing after multiple rate cuts since mid-2024. This was expected — inflation has cooled off from its 2022 highs, and the central bank wants to avoid overcorrecting too quickly.

With no move from the BoC, banks followed suit. Most lenders kept their 5-year fixed mortgage rates unchanged this week, and variable rates remained steady, closely tied to the BoC’s prime rate.

But just because things are still doesn’t mean they’ll stay that way.

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What Could Trigger the Next Rate Move?

1. Inflation’s Next Move

Although inflation has cooled to around 2.1%, it’s been sticky in some key areas like rent and groceries. If those costs stay stubborn, the BoC may slow down or halt future cuts — keeping borrowing costs higher for longer.

2. Bond Market Watch

Fixed mortgage rates follow the 5-year Canadian bond yield, which has hovered around 2.85% lately. If those yields drop, fixed rates could fall too. But if yields spike (due to global volatility or trade fears), fixed rates might rise again — even if the BoC is cutting.

3. Trade Tensions

Global trade uncertainty — especially with the U.S. — could drive up inflation again. This puts pressure on the BoC to stay cautious. If inflation rebounds due to tariffs or supply chain issues, mortgage rates could stall or even climb.

What Experts Are Predicting

Most big banks still expect two more BoC rate cuts by the end of 2025, likely in July and September, bringing the overnight rate down to 2.25%.

But that’s the optimistic view.

If inflation flares or global tensions increase, we may see fewer cuts — or none at all.

What This Means for You

If You’re Renewing Soon:

You’re probably coming off a mortgage rate that was under 2%. Today, rates are hovering around 4.8% to 5.3% for 5-year fixed terms. That’s a major jump — and it’ll show up in your monthly payments.

Start shopping around now. Even a small rate discount can save you thousands over the next term.

If You’re House Hunting:

This mid-summer lull could be a window of opportunity. If rates dip slightly in August, you might catch the tail end of a buyer-friendly market — before fall competition picks up again.

If You Have a Variable Rate:

Keep an eye on the BoC. If the July cut happens, your rate could drop slightly. But don’t expect dramatic changes — unless the economy takes a turn.

Final Thoughts

The mortgage rate calm we’re seeing now is a little deceptive. Yes, rates are steady today — but all the signs point to potential movement by late summer. Whether it’s a cut or a spike depends on inflation, bond yields, and how global markets behave.