Canada’s mortgage rate outlook for 2025 points toward slightly lower borrowing costs and increased opportunities for homebuyers and owners seeking renewal or refinance. This year, the Bank of Canada’s policy rate is forecast to remain in the 2.25–2.50% range, with further modest cuts possible as the economy and inflation pressures continue to evolve.​

Bank of Canada Policy Rate Trends

The Bank of Canada resumed its rate easing cycle in September 2025, lowering the benchmark overnight rate by 25 basis points to 2.50%, the lowest since July 2022. Market analysts expect another 0.25% cut, likely bringing the policy rate to 2.25% by year-end. Ongoing economic weakness, including job losses and contracting GDP, has pressured the central bank toward a more accommodative stance in support of households and businesses.​

Fixed and Variable Rate Forecasts

Fixed mortgage rates, especially five-year terms, have closely followed declining bond yields, falling to 3.79–3.99% for the best high-ratio offerings as of October 2025. Variable mortgage rates, linked to the prime rate, have dropped to approximately 3.70%, reflecting recent benchmark rate cuts. Big banks and leading mortgage brokers project that rates for both fixed and variable mortgages will stabilize or edge slightly lower through early 2026, mirroring the anticipated monetary policy path.​

Economic Factors Shaping the Outlook

Canada’s mortgage rates are being shaped by a combination of slow GDP growth, softening export demand, rising unemployment, and persistent trade disruptions. These headwinds have prompted the Bank of Canada to provide more support through lower borrowing costs, aiming to stimulate consumer spending and housing activity while maintaining inflation below its 2% target.​

What It Means for Borrowers

For those renewing or seeking a new home loan in 2025, modestly lower mortgage rates will lessen payment pressures, particularly for variable-rate holders. Fixed rates have also fallen slightly, providing improved affordability for buyers and owners looking to lock in lower costs. With rate holds and further cuts possible through year-end, current trends favor homeowners who act early to secure competitive options in the market.​

Outlook and Advice

Looking forward, the mortgage market remains dynamic. Borrowers should closely monitor upcoming Bank of Canada announcements on October 29 and December 10, as further cuts may materialize if economic conditions warrant. Staying informed and comparing lender offers can help homeowners make the most of the evolving rate environment in 2025.​

Ready to explore your options for renewal, refinancing, or a new mortgage in Canada? Reach out to the Cannect team for personalized insights and access to leading rates for 2025.