Mortgage rates in Canada remain high as we head deeper into 2025. The Bank of Canada’s key rate sits at 2.75%, and most 5-year fixed mortgage rates are in the high 4% range. Variable rates are slightly lower, between 4% and 4.5%.
The good news? Inflation is cooling, with the CPI at 1.7%, and experts predict we may see more rate cuts later this year. But nothing is certain yet. In this blog, we’ll cover the latest mortgage rate trends, what the big banks forecast, and what it means for homebuyers, refinancers, and anyone renewing their mortgage in 2025.
Current Mortgage Rates: Fixed vs. Variable:
As of mid-2025, Canadian mortgage rates are still high. Most lenders are offering special 5-year fixed mortgage rates between 4% and 4.5%, while variable mortgage rates, tied to the prime rate, range from 4.3% to 4.6%.
Fixed rates are more predictable. At big banks, the best 5-year fixed offers sit between 4.5% and 5%. For example, RBC’s current offer is 4.69% (APR 4.72%). On the other hand, posted rates are much higher. NerdWallet lists some as high as 6.09%. If you’re working with a broker or smaller lender, you might find fixed rates as low as 3.8%, according to Ratehub.
Variable rates are slightly lower for now. Since the Bank of Canada’s prime rate is 4.95%, some banks are offering discounts like prime – 0.40%, which equals 4.55%. RBC even lists high-ratio variable deals around 4.25%. If you qualify for the lowest rates in the market, Ratehub notes you might pay as little as 3.9% to 4.0%.
Here’s a quick rate comparison as of July 2025:
| Mortgage Option | Approx. Rate |
| 5‑Year Fixed (bank special offer) | 4.69% |
| 5‑Year Variable (Prime – 0.40) | 4.55% |
| Lowest 5‑Year Fixed in Market | ~3.8% |
| Lowest Variable in Market | ~4.0% |
These are ideal-case rates, often for insured or high-ratio mortgages. As NerdWallet explains, most borrowers qualify for discounted rates through brokers. Still, fixed rates tend to sit slightly above variable ones, mainly because bond yields are still high.
Economic Outlook: Inflation and the BoC:
- Inflation dropped to 1.7% in April 2025, moving closer to the Bank of Canada’s 2% target.
- Core inflation remains between 2%–3%, still above ideal levels.
- Unemployment rate rose to 6.9%, signalling a softer job market.
- GDP growth has slowed, pointing to a cooling economy.
- The BoC held its policy rate at 2.75% after a small cut in March.
- Experts say the Bank is being cautious due to global trade uncertainty and sticky inflation.
- Most major banks expect rate cuts to resume later in 2025, but slowly.
- The next rate announcement is on July 30, 2025—a possible turning point.
- Economists agree: gradual cuts are more likely than quick drops.
What Are The Mortgage Rate Predictions for Late 2025?
| Institution | Rate Prediction | Expected Cuts | Key Insight |
| RBC Economics | 2.0% overnight rate | Multiple small cuts | Fixed rates may stay elevated despite lower policy rates. |
| TD Bank | ~2.25% by year-end | Two 25 bps cuts (e.g., July, Fall) | Variable rates could drop 0.50% overall. |
| CIBC | 2.25%–2.5% | Up to 75 bps in cuts | Cuts may begin mid-year, depending on inflation and jobs. |
| Scotiabank | No cuts in 2025 | None | Core inflation near 3% could pause BoC action all year. |
| True North Mortgage | ~2.25% (market expectation) | Possible July/Fall cuts | Markets divided: 10–50% chance of July cut, more likely in fall. |
How 2025 Mortgage Rate Trends Affect Homebuyers and Homeowners?
First-Time Homebuyers:
Buying your first home in 2025 isn’t easy. High interest rates mean larger monthly payments, making it harder to qualify and afford. But waiting too long can also be risky—home prices and rent might rise again. Take advantage of programs like the First Home Savings Account (FHSA) and the Home Buyers’ Plan (HBP) to help build your down payment. If you need payment stability, a fixed mortgage rate may be safer. But if you believe rates will drop later in the year, a variable rate mortgage could start cheaper. It all depends on your budget and risk comfort.
Refinancing & Renewals:
If your mortgage is up for renewal in 2025, expect a payment shock—especially if you’re coming off a low fixed rate from years ago. Many will see their monthly costs jump by 15–20%. However, those with variable-rate mortgages could see slight drops in payment due to recent rate cuts. Before renewing, explore all your options: fixed, variable, shorter terms, or even extending your amortization to lower your monthly burden. Always compare offers from your bank and a broker.
General Borrowers:
Whether you’re buying, renewing, or refinancing, choosing between fixed and variable is the big decision. Fixed rates offer peace of mind, especially during economic uncertainty. Variable rates are more flexible and could save you money if the Bank of Canada cuts rates. But there’s no guarantee banks will pass on the full savings. And remember, the mortgage stress test (5.25%) still applies, so make sure you qualify before you shop. Experts recommend locking in a rate if you find a deal that fits your budget.
Your Next Steps – Buying, Renewing, or Refinancing in 2025:
Mortgage rates in Canada are still high, but relief may be coming. Inflation is easing, and most experts expect gradual rate cuts in late 2025. Still, timing is uncertain, and fixed rates may stay firm.
If you’re a first-time buyer, explore programs like FHSA or HBP to boost your savings. Renewing soon? Compare lenders, consider fixed vs. variable, and plan for possible payment increases. Choose what fits your budget, not just the lowest rate. Need help deciding? The team at Mortgage Squad can guide you through today’s market with confidence.