With more than half of Canadian homeowners looking to renew their mortgages in 2025, current mortgage holders will be watching Wednesday’s Bank of Canada interest rate announcement with a keen eye.
Interest rates in Canada are holding steady for now, with the Bank of Canada’s governor Tiff Macklem describing the “unpredictable” outlook for United States trade policy, and saying that it may be “hard to restore” trust in our neighbours to the south.
Experts say that while the announcement of a rate hold does not make things easier for anyone renewing their mortgage, it does not make things any worse either.
“A rate cut today would have made renewal a little easier for homeowners leaning toward a variable, assuming it shaved 25 basis points off current rates. For many people, especially those having trouble balancing a mortgage with the cost of living, that’s not a game-changing discount,” said Clay Jarvis, mortgage expert at NerdWallet Canada.
Wednesday’s decision by the central bank effectively “means nothing changes for homeowners staring down a renewal” with variable rates hovering within the 4-4.5 per cent range at least until the Bank’s next decision on Sept. 17.
“Notably, the Bank has put the possibility of a cut back on the table,” said Penelope Graham, mortgage expert at Ratehub.ca. “It has emphasized that it will continue to assess the impacts a weaker economy will have on inflation, as well as the ongoing costs of tariffs and trade.”
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A future rate cut means that some mortgage holders might want to act soon, she said.
“Anyone currently shopping for a new mortgage rate, or coming up for renewal on their existing term, should take out a rate hold or pre-approval immediately to secure access to today’s rate pricing,” she added.
Most Canadian mortgage holders renewing their mortgages in 2025 or 2026 are likely to see an increase in their monthly payments, a recent Bank of Canada report said.
Most of these borrowers hold a five-year, fixed-rate mortgage, the central bank said, and could see their monthly payments increase by 15 to 20 per cent, a Bank of Canada staff analytical note said.
However, the increase could be different depending on when you’re renewing.
“Compared with December 2024 payments, the average monthly mortgage payment could be 10% higher for those renewing in 2025 and 6% higher for those renewing in 2026,” the report read.
However, the picture looks very different for those who are planning on renewing variable-rate mortgages. For them, a renewal might lead to a decline in monthly payments of five to seven per cent.
With the Bank of Canada holding interest rates steady, some experts believe this will signal stability to buyers who are on the sidelines, owing to uncertainty from U.S. President Donald Trump’s trade war.
“Stability is never a bad thing for stock markets or housing markets. This will be more helpful than, for example, if rates had been cut and messaging was, ‘We’re expecting dramatic economic turmoil ahead because of tariffs,’” said Phil Soper, CEO of Royal LePage.
While some buyers might still hope for home prices and interest rates to come down further, Leah Zlatkin, licensed mortgage broker at LowestRates.ca, said patience may not necessarily pay off for first-time homebuyers.
“Even if rates drop slightly, the bigger risk is what happens to home prices. Lower rates often bring more competition and that can drive prices up quickly, as we saw during the pandemic,” Zlatkin said.
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