The Bank of Canada left its policy rate unchanged at 2.75%. This was a bit of a surprise because economists have predicted a few more rate cuts this year. The effects of rate cuts are not immediately apparent, and the Bank of Canada appears to be playing it safe in these uncertain times. The prime lending rate, affecting variable-rate mortgages, lines of credit and HELOC’s, remains at 4.95%.
Fixed rates have seen some increases over the past couple of months. They are determined by the bond market, completely separate from any Bank of Canada’s rate announcements.
While the Bank of Canada controls the overnight lending rate (which impacts variable rates), fixed mortgage rates are closely tied to the yields on Canadian government bonds—specifically the 5-year bond. When bond yields rise, fixed mortgage rates typically follow. These yields reflect investor expectations around inflation, economic growth, and interest rate direction.
I was at a conference yesterday, and after listening to the economic forecast, the consensus is that rate cuts may still be coming later this year.
If you’re wondering what this means for your mortgage strategy—whether you’re renewing, buying, or just keeping an eye on the market—feel free to reach out. I’m happy to walk through your options.
The next rate announcement is scheduled for Wednesday, July 30 2025.