Bank of Canada Holds Rates Steady at 2.75%, Hints at Autumn Cuts
BoC holds its key rate at 2.75% in August 2025, with economists predicting rate cuts by fall. What it means for mortgage holders and new homebuyers.
A Strategic Pause Amid Changing Economic Signals
The Bank of Canada (BoC) has kept its key interest rate unchanged at 2.75%, signaling a cautious approach as it navigates persistent inflation, sluggish growth, and softening consumer demand.
This marks the fourth consecutive policy meeting where the central bank opted to hold rates steady — giving mortgage holders and homebuyers a glimmer of stability after two years of rapid tightening.
What the Bank Said
In its August policy statement, the BoC acknowledged that:
“Inflation has cooled, but not uniformly. We see room to pivot later this year depending on core price behavior, employment, and housing resilience.”
Governor Tiff Macklem did not rule out a rate cut before year-end, but reiterated the need to assess domestic wage pressures and global energy prices.
Will Rate Cuts Begin in Fall?
| Institution | Forecast |
|---|---|
| RBC Economics | Rate cut in October (25 bps), CPI projected at 2.3% |
| Desjardins | Two 25 bps cuts before December |
| TD Bank | First cut likely in December unless GDP shrinks earlier |
What This Means for Mortgage Borrowers
Whether you’re house hunting or holding a variable-rate mortgage, this pause matters.
Variable Rate Mortgages:
- No immediate change in payments — but possible lower rates later in 2025.
- Good time to compare lender offers, as spreads between lenders widen before a rate pivot.
Fixed Rate Mortgages:
- Still tied to bond yields, which have softened slightly since July.
- Some lenders have cut 5-year fixed rates by 10–15 bps in anticipation of BoC easing.
5-Year Bond Yield Trend (Canada)
| Date | 5-Year Yield |
|---|---|
| June 1, 2025 | 3.47% |
| July 15, 2025 | 3.39% |
| August 6, 2025 | 3.28% |
Should You Lock In or Wait?
First-time buyers: This could be your moment to get pre-approved and wait for a fall dip.
Variable holders: Stay patient, avoid panic switching unless renewal is within 3 months.
Renewals: Consider short-term fixed (1–3 years) as a middle-ground.
Mortgage Expert Takeaway
This rate hold gives Canadians a window of certainty — but it also marks a transitional moment. If inflation trends down, the BoC will likely ease in October or December, offering lower stress test rates and potentially renewed affordability.
If you’re unsure how to position your mortgage strategy heading into fall, now is the time to:
Review your amortization
Re-shop rates before renewal
Get pre-approved with flexibility
Need help navigating interest rate strategy in 2025?
Talk to a licensed advisor at Mortgage.Expert — Canada’s trusted source for rate insights and renewal guidance.
Shahrukh Khan
Articles: 58Related Posts
Stuck with a Mortgage Decision?
Don’t stress — our team is here to help. Reach out for free, no-obligation guidance.
Contact the Experts