Mortgage rates in Canada are expected to go down gradually in the near future. Following the Bank of Canada's first interest rate cut since March 2025, lowering the overnight rate from 2.75% to 2.5%, further rate cuts are anticipated throughout 2025. Most experts predict additional reductions by about 25 basis points each at the September and December meetings, potentially bringing the policy rate to around 2.25% by the end of 2025. This likely translates into variable mortgage rates dropping below fixed mortgage rates, providing some relief for borrowers, though the decreases will be moderate, and borrowing costs may remain somewhat elevated compared to historic lows. Rate cuts are driven by a weakening economy, rising unemployment, and inflation stabilizing within target levels.
In summary, mortgage rates in Canada are projected to decrease further in late 2025, with visible cuts already underway and more expected before year-end. However, the pace will be gradual, reflecting balanced caution by the Bank of Canada amid economic uncertainties.
