The Bank of Canada (BoC) has once again opted to hold its benchmark interest rate at 2.75%, marking the third consecutive pause in its policy tightening cycle. The announcement, made on July 30, 2025, reflects a cautious approach in the face of global trade tensions, slowing inflation, and lingering economic uncertainty.

The central bank’s decision came as no surprise to economists, but the accompanying tone hinted at a growing openness to rate cuts in the coming months — a signal that could bring welcome relief to Canadian mortgage holders and first-time homebuyers.

Why Did the Bank Hold?

According to BoC Governor Tiff Macklem, while Canada’s core inflation metrics have cooled and wage growth has stabilized, the central bank still sees external risks, especially related to a looming U.S.–Canada trade standoff.

“There are signs that inflation is gradually heading toward our 2% target,” Macklem stated. “But downside risks from global demand and trade disruptions are keeping us cautious.”

While domestic GDP growth has slowed, the bank noted that household spending remains resilient, and unemployment has not spiked — suggesting a delicate balance between cooling the economy and preventing a hard landing.

What Does This Mean for Mortgages?

If you’re a Canadian mortgage holder — especially on a variable-rate mortgage — this hold gives you a moment of stability. Your payment amount is unlikely to change in the immediate term.

However, the more interesting angle is the directional guidance: The Bank acknowledged that if inflation continues to ease, it could cut rates later this year. Many market analysts now expect a 25–50 bps rate cut before the end of 2025, possibly starting as early as October.

This could affect:

Renewals: If your mortgage is up for renewal in 2025, you may benefit from slightly lower fixed rates.
New buyers: Rate cuts could improve affordability and borrowing power — though not dramatically.
Stress test qualification: Lower rates may also reduce the qualifying benchmark for insured mortgages.

What’s Next?

The BoC is scheduled to meet again in September, and all eyes will be on:

CPI and Core CPI data
Bond yield movement
U.S. Federal Reserve rate stance
Trade negotiations

If inflation remains tame and GDP growth stalls, a rate cut is increasingly likely — which could finally nudge mortgage rates lower after two years of elevated borrowing costs.

Final Word from Mortgage.Expert

While this isn’t the rate cut homeowners have been waiting for, it opens the door to relief later this year. If you’re house hunting or planning a renewal, now is the time to: