Mortgage rates in Canada have always been a hot topic, but in 2025, they’ve become a major focus for homebuyers, real estate investors, and financial planners alike. Whether you’re renewing your mortgage, buying your first home, or exploring investment opportunities, understanding where rates are heading is essential. So, what do the experts have to say about mortgage rates in 2025?
In this blog, we break down expert insights, current trends, and what it all means for Canadian borrowers like you.
A Quick Recap: What Are Mortgage Rates?
Mortgage rates are the interest you pay on a loan when you borrow money to buy property. These rates can be fixed (stay the same throughout the term) or variable (fluctuate based on market conditions). In Canada, mortgage rates are influenced by the Bank of Canada’s policy interest rate, inflation, global economics, and lender competition.
The 2025 Mortgage Landscape: What’s Going On?
Experts across Canada are closely monitoring mortgage rates in 2025, and here’s what they’re seeing:
- Stabilization: After years of turbulence, experts believe mortgage rates are starting to stabilize.
- Mild Decrease Expected: With inflation under better control, some financial analysts predict modest rate cuts by the Bank of Canada before year-end.
- No Return to Ultra-Low Rates: Economists agree, don’t expect 1–2% mortgages again any time soon. Those were pandemic-driven anomalies.
Let’s dive deeper into what industry professionals are predicting.
What the Bank of Canada Is Signalling?
The Bank of Canada plays a huge role in setting the tone for mortgage rates. In its recent statements, the Bank has hinted at:
- Controlled inflation targets
- Potential rate cuts if inflation stays below 3%
- Continued caution in policy adjustments
Economists from RBC and Scotiabank predict two small rate cuts in late 2025, which could push variable mortgage rates slightly lower.
Expert Take: “We expect the policy rate to fall gradually, which should bring 5-year fixed rates closer to 4.5% by early 2026,” says Craig Wright, Chief Economist at RBC.
What Do Mortgage Brokers Think?
Mortgage brokers across Canada are on the front lines, and they’re noticing interesting trends in 2025:
- Clients are locking in fixed rates more than going variable, due to economic uncertainty.
- 5-year fixed mortgage rates are hovering between 4.75% and 5.25% at most lenders.
- Shorter-term fixed rates (2–3 years) are gaining popularity, as borrowers hope to refinance when rates drop.
Broker Insight: “Borrowers are cautious, but smart. Many are choosing 2- or 3-year fixed terms to avoid locking in high rates for too long,” says Lisa Tran, Senior Mortgage Broker at Mortgage Squad.
What Financial Analysts Forecast for 2025 and Beyond?
Big financial institutions and economists are cautiously optimistic:
- TD Economics forecasts mortgage rates will decline slightly in the second half of 2025.
- BMO predicts fixed rates will average around 4.75% by year-end.
- CIBC expects inflation will cool enough for rate relief, especially for variable-rate borrowers.
Financial Outlook: “Canada’s housing market is resilient, but affordability remains tight. Slight relief in mortgage rates could trigger a surge in demand in 2026,” says Benjamin Tal, Deputy Chief Economist at CIBC.
What This Means for First-Time Buyers in Canada?
If you’re a first-time homebuyer in Canada, 2025 is a year to proceed with caution—but also opportunity. Here’s what to keep in mind:
- Pre-approvals matter more than ever: Locking in a rate today can shield you from sudden increases.
- Explore flexible mortgage options: Consider mortgages with portable or assumable features.
- Government incentives: First-time buyers can still benefit from federal programs like the First-Time Home Buyer Incentive and the Home Buyers’ Plan.
What About Renewals and Refinancing in 2025?
If your mortgage is up for renewal in 2025, experts recommend:
- Starting early: Begin your renewal process 4–6 months before your term ends.
- Negotiating hard: Don’t settle for your current lender’s first offer.
- Considering a switch: A better rate or flexible terms with another lender might be worth the paperwork.
For those thinking about refinancing, 2025 is a good year to:
- Consolidate debt at a lower rate
- Access home equity for renovations or investments
- Change mortgage type (e.g., variable to fixed)
Should You Lock in or Float in 2025?
One of the biggest questions borrowers ask is whether to lock in a fixed rate or go variable. Here’s what experts recommend in 2025:
- Fixed-rate mortgages are safer if you value predictability.
- Variable-rate mortgages might be appealing if you’re comfortable with short-term risk and believe rates will drop in 2026.
Mortgage Squad Tip: “Choose based on your personal finances, not market timing. Talk to a licensed mortgage broker to align your goals with the right mortgage product.”
Will Mortgage Rates in Canada Ever Be Low Again?
It’s unlikely we’ll see the ultra-low rates of 2020–2021 again. But that’s not necessarily a bad thing. Moderate rates:
- Keep the housing market more balanced
- Protect the economy from overheating
- Encourage responsible borrowing
Most experts believe the new “normal” for 5-year fixed rates will stay between 4% and 5% over the next 3–5 years.
Final Verdict: What Should Canadian Borrowers Do in 2025?
If you’re navigating the mortgage landscape in 2025, here’s a simple breakdown of what experts want you to remember:
- Stay informed: Rates may shift, but preparation beats prediction.
- Work with a trusted broker: A licensed mortgage expert can help tailor the best solution.
- Consider your full financial picture: Don’t chase the lowest rate—focus on long-term value.
- Get pre-approved before home shopping: It gives you bargaining power and clarity.
Whether rates go up or down, the smartest move you can make is to stay educated and work with professionals who understand your unique goals.
Speak to a Mortgage Expert Today..
At Mortgage Squad, we help Canadians make confident, informed mortgage decisions. Whether you’re a first-time buyer, seasoned investor, or renewing this year, we’re here to guide you every step of the way.