7/31/2025
| SHARE
Posted in Interest Rates by Vanguard Realty | Back to Main Blog Page
Variable rates are set to remain unchanged, while fixed-rate borrowing costs aren't likely to fall anytime soon
Mortgage borrowers will see variable rates hold steady following the Bank of Canada’s decision to maintain its key policy rate at 2.75% on July 30. But according to Penelope Graham, mortgage expert at Ratehub.ca, those seeking or renewing fixed-rate mortgages should prepare for continued upward pressure as bond yields remain elevated.
“For those currently in the market for a home, today’s rate hold means there will be no change for variable interest rates,” said Graham in a new analysis. This is because variable mortgage rates are directly linked to lenders’ prime rates, which remain unchanged at 4.95% in line with the Bank’s overnight lending rate.
Fixed-rate borrowers are in a similar boat. “This rate hold will keep bond yields at their current elevated levels, which has put upward pressure on fixed rates in recent weeks,” Graham said. Fixed mortgage rates are influenced by government bond yields—particularly the five-year bond—which have stayed above 3% through July as investors price in ongoing inflation risks and global trade tensions.
Graham emphasized the importance of acting quickly in today’s rate environment. “Anyone currently shopping for a new mortgage rate, or coming up for renewal on their existing term, should take out a rate hold or pre-approval immediately to secure access to today’s rate pricing,” she advised.
While the central bank’s latest decision marks its third consecutive hold, Graham pointed to ongoing inflation and trade uncertainty as key factors influencing future rate direction. “It’s no surprise that the Bank is getting further entrenched in a holding pattern; the most recent inflation report showed the core consumer price index measures remain above the BoC’s 2% target, while other data suggests the economy is faring better than otherwise expected. This has prompted the Bank to keep its rate unchanged for the third time in a row.”
She also noted that a rate cut remains a possibility: “Notably, the Bank has put the possibility of a cut back on the table. It has emphasized that it will continue to assess the impacts a weaker economy will have on inflation, as well as the ongoing costs of tariffs and trade. If inflation starts to soften and trade price pressures are contained, there may be a need for a rate reduction in the future.”
In the meantime, borrowers navigating today’s market conditions—especially those nearing renewal—are being urged to secure their options before further fixed-rate increases take hold.
Source: Canadian Mortgage Professional
Bank of Canada, Bank of Canada Benchmark Rate, Fixed Rate Mortgages, Interest Rate Forecast, Interest Rates, Mortgage Consumers, Mortgage Interest Costs, Mortgage Trends, Variable Rate Mortgages
