Rate Forecast - Medium Term February 2025

Many Canadians are facing financial uncertainty with rate renewals, increasing costs, and the looming potential of tariff threats. Managing mortgage payments is a key part of financial stability for most Canadians. Today’s unpredictable climate has many struggling to make long-term and medium-term decisions related to mortgage rates. 

David Larock from Integrated Mortgage Mortgage Solutions weighs in on the events happening in the US.  

“Steadily rising inflation is an inconvenient truth for Trump because it will make it more difficult for him to sell the lie that his tariffs aren’t pushing up US prices.  American consumers, who are already feeling the pinch, will be increasingly sensitive to each additional price uptick.”

“Unlike in the US, inflation in Canada has returned to its normal range. That gives the Bank flexibility to enact more rate cuts to offset trade war headwinds. I expect that it will continue to do just that over the near term.”

“This creates the exception that those with variable rates are likely to further drops in the Bank of Canada prime rate which will lower those rates.”

Rising inflation, tariff’s and fluctuating interest rates leave Canadian home owners uncertain.

Fixed rates are dependent on the US, and bond rates, inflation, and tariffs pose a different result.

“In the medium term, if higher prices persist, and if opportunistic companies enact non-tariff-related price increases, price pressures will broaden,” he added. “In that scenario, both bond yields and the fixed mortgage rates that are priced on them will rise.”  

“Ron Butler of Butler Mortgage agrees, telling Canadian Mortgage Trends that the latest forecasts out of the U.S.—for only one quarter-point cut at the end of the year, or potentially no more at all—are likely to drive conventional rates higher again by another 20 bps.”

Written by Steve Huebl, Canadian Mortgage Trends.

The current mortgage climate is complex and fluid. There is no “one solution that fits all”. Reach out to discuss which mortgage suits you.  It may be a combination of both fixed and variable, a no-payment mortgage, or a consolidation mortgage. It looks like the time to act is now so that mortgage holders can weather the stormy forecast ahead. 

If you are having difficulties or would simply like to review your mortgage options, please feel free to get in touch.