U.S. Mortgage Rate Drops to 6.67% — Will Canada Follow?

U.S. Fixed Mortgage Rates Hit 3-Month Low — What It Means for Canadian Borrowers

As of July 4, 2025, the average 30-year fixed mortgage rate in the United States has dropped to 6.67%, according to Freddie Mac — the lowest level seen since early April. The 15-year fixed rate has also declined to 5.80%. With U.S. inflation easing and bond yields softening, many borrowers are breathing a cautious sigh of relief.

But Canadian borrowers are asking the obvious question: Will Canadian mortgage rates follow suit?

U.S. vs Canadian Rate Trends: Not Always in Sync

While Canadian mortgage rates often follow the direction of U.S. bond yields, the two markets don’t always move in lockstep. The U.S. Fed has signaled potential rate cuts in late 2025, but the Bank of Canada (BoC) has remained more cautious, waiting on core inflation to fall closer to its 2% target before making aggressive moves.

That said, falling U.S. yields do affect global bond pricing, and Canadian fixed mortgage rates — which are tied to the 5-year Government of Canada bond yield — could see downward pressure if this trend continues.

Mortgage Application Activity Is Picking Up in the U.S.

Freddie Mac’s latest report also notes a 2.7% uptick in mortgage applications in the U.S. — a sign that rate-sensitive buyers are re-entering the market. In Canada, buyer psychology tends to react even faster, especially after a prolonged period of high rates.

If even one more Canadian lender drops their 5-year fixed below 5.00% — which is currently rare — we could see renewed competition among brokers and banks heading into the late summer housing season.

What Canadian Borrowers Should Watch Now

If you’re a Canadian mortgage shopper or renewal customer, here’s what to keep an eye on:

• 5-year bond yield trend in Canada — if it continues to dip, lenders will be pressured to cut rates
• BoC commentary on July 24 — any hint of policy loosening could trigger lender promos
• U.S. economic data — weak jobs or inflation numbers will increase downward global rate pressure

Final Thought

While Canadian mortgage rates haven’t yet mirrored the U.S. drop, signs of softening are beginning to appear. For homeowners nearing renewal or first-time buyers sitting on the sidelines, the next few weeks may offer the first real chance to lock in relief since 2023.

If U.S. rates continue to slide and Canadian bond markets follow, the long-awaited fixed-rate “descent” could finally arrive. Until then, savvy Canadian borrowers should stay alert — and be ready to pounce.