A for sale/sold sign stands in front of residential homes in the Riverside South neighbourhood of Ottawa in August, 2024.PATRICK DOYLE/The Canadian Press
The Bank of Canada’s decision to hold interest rates this week will keep variable mortgages steady, even as it signals an uncertain path ahead for the bank’s rate policy.
The central bank is juggling the potential need to cut rates as the country’s economy slows, and the need to hike them if inflation from rising oil prices starts creeping into other sectors.
However, economists largely expect that the BoC will have to raise rates by the end of the year. Bond swaps markets, which indicate market expectations around interest-rate policy, are also pricing in a quarter-point rate hike later in 2026.
But Victor Tran, a mortgage specialist with Rates.ca, said his clients aren’t concerned about BoC rate decisions. Instead, they’re more interested in fixed-rate mortgages, which are affected by bond markets. Bond yields have increased as a result of the war in Iran, and are likely to stay high until a peace deal is reached.
Almost 10% of Toronto mortgage holders won’t qualify to refinance next year, BoC says
“The majority of my clients are opting for fixed rates for the stability,” Mr. Tran said.
Meanwhile, Anne-Elise Cugliari Allegritti, vice-president of research and communications for real estate brokerage Royal LePage, said a rate hike down the road could motivate buyers who have been waiting on the sidelines, as the threat of higher borrowing costs could bite into their spending power.
A rate hike of 25 basis points would “be the catalyst for that group of buyers to say we’ve reached the bottom and are heading up the other side,” Ms. Cugliari Allegritti said. She added that the cost of increasing mortgage rates would outweigh any savings from home prices dropping. (There are 100 basis points in a single percentage point.)
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Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday.