Monthly Market Update - April 15, 2025

Seldom do we witness such extreme volatility in political and economic headline risk. The ongoing shifts in U.S. tariff policy are creating a chilling effect on Canadian businesses and consumers alike. This heightened uncertainty is proving difficult to navigate, dampening confidence and stalling housing and mortgage market activity

In the face of this uncertainty, the Bank of Canada will be making another rate decision tomorrow. The market is fairly split on expectations for a rate cut. Today the market is pricing the odds of a rate cut at just over 40%. If there is no cut tomorrow, more cuts are still expected and could happen in June or July.

Predicting where rates may go next is always difficult, but today, nearly impossible. Given the risks, it is wise for prospective mortgage borrowers to lock-in rates with a rate hold or mortgage pre-approval. This won't commit you to the held rate but it will provide a cap on rates for you and protect you from the risk that rates may suddenly increase. This is a good risk management tool for new borrowers.

Our best national insured, five-year fixed mortgage rate is now 3.94% and best insured, three-year fixed mortgage rate is 4.04%. In some Provinces, better rates can be found so reach out to us to find out where the best deals are available.

Variable rates are only slightly higher than fixed rates. One more rate cut and they will finally fall below fixed rates once again. Our best national insured, five-year, variable mortgage rate is 4.10%.

Housing sales were down again in March. Tariff noise, election news and the resulting economic uncertainty provides many market participants good reason to pause activity. Those that are able to stomach the uncertainty can take advantage of the quiet market if they are prepared. Otherwise, once the clouds of uncertainty clear we should see healthy market activity once again.

Mortgage Market

The prime rate is 4.95%
Bond yields have varied over the past month but the five-year yield is only 0.08% higher than this time last month.
The best nationally advertised mortgage rates are in the table below:

A graph showing the rate history of mortgage rates

The five year government bond yield is 2.70% today. It peaked at 4.42% in October 2023

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Mortgage Market Headlines

Variable mortgage rates are up slightly as lenders adjust their margins
Fixed mortgage rates are down as some lenders are being aggressive on pricing
Short-term fixed mortgage rates (1 & 2-year rates) remain higher than 5-year mortgage rates. The yield curve is flattening, however, and now 3-year mortgage rates are comparable to 5-year rates.
Poor employment numbers and slumping stock markets keep prospects of an April rate cut alive - BMO
Bank of Canada is more likely to halt interest rate cuts after tariff pause - Reuters
Odds of a Bank of Canada rate cut jump as inflation sees surprise drop - CMP
The big banks are divided on how much the Bank of Canada will cut this year and next - Canadian Mortgage Trend
Awaiting further rate cuts before refinancing your mortgage? Better to act now - Financial Post
Trade tensions weigh on Canadian confidence - Bank of Canada
64% of variable-rate mortgage holders remain unaffected by higher borrowing costs - CIBC
42% of mortgage holders are shopping for better rates - CIBC
Fixed mortgage rates keep falling, but variable-rate pricing is on the rise - Canadian Mortgage Trends
Falling rates spell trouble for anyone needing to break their mortgage contract at a bank - Financial Post
Banks more likely to deny mortgage for workers threatened by Trump tariffs - Toronto Star
40.4% of Canadians say they will not fully pay off their mortgages until they are in their 60's - REMIC
Inflation in Canada slowed to 2.3% in March.

Housing Market

The MLS Home Price Index (HPI) declined 1% month-over-month in March 2025. The actual (not seasonally adjusted) national average sale price fell 3.7% year-over-year. The actual national average home price was $678,331 at the end of March 2025.

A graph showing the residential average price in canada

Housing Sales fell by 4.8% month-over-month in March 2025. Actual (not seasonally adjusted) sales were down 9.3% versus the prior year, March 2024.

A graph showing residential sales activity in canada

Housing Market Headlines

New listing activity in March increased 3% month-over-month - CREA
Nationally, there were 5.1 months of housing inventory for sale at the end of March 2025, inline with the long-term average of 5 months - CREA
While the trend of falling monthly sales has been observed across Canada over the last few months, there are still many regions where sales are high, inventory is near record lows, and prices are rising - CREA
Up until this point, declining home sales have mostly been about tariff uncertainty. Going forward, the Canadian housing space will also have to contend with the actual economic fallout - CREA
Almost half (47%) of prospective homebuyers in Canada have postponed their purchase plans due to concerns about the U.S. trade dispute - Royal LePage & Leger
A tale of two markets: Real estate activity trending up in Canada's more affordable regions, treading water in the most expensive - Royal LePage
Vancouver's housing sales lowest for month of March since 2019 - REBGV
Calgary home sales slide 19% as economic uncertainty grows, prices hold steady - CREB
Edmonton is Canada's hottest market right now - Real Estate Magazine
Toronto home sales at a 27 year low - TRREB
Home sales in Ottawa down yoy in March but prices up slightly - CTV News
The renewed softening in prices was most notable in British Columbia and Ontario’s Greater Golden Horseshoe. Across much of the Prairies, Quebec, and the East Coast, prices have continued to push higher - CREA
As sale prices dive, inventory of unsold newly-built Toronto-area condos grows - Globe & Mail
The outlook for recreational housing remains positive even as economic uncertainty grows - Royal LePage
Home prices in Canada expected to dip in 2025 - Urbanized
Canada's homebuyers wait out trade war fallout - RBC
Amid economic uncertainty majority of Canadian homeowners express confidence in managing mortgage payments and budgets - CIBC
54% of Canadians plan to buy a home within the next five years - NerdWallet
Both Conservatives and Liberals have pledged to cut the GST on new-build homes for some first-time homebuyers - MPC
Housing starts unchanged since 1970s, while Canadian population growth has more than tripled - Fraser Institute
Housing starts declined 0.7% in March - CMHC

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About The Author

Don Scott

Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.

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Mortgage Rate Forecast For 2026

By George Holicka • January 27, 2026

What are Canadian mortgage rates going to do in 2026? We expect mortgage rates to remain fairly stable through 2026. We think that the Bank of Canada will hold rates steady for much of the year, though some analysts are calling for hikes in the latter half of the year. Bond yields are also expected to remain stable, meaning that fixed mortgage rate should not move much. Predictions are difficult and the markets are sending mixed signals right now. Read on to find out what this might all mean? 2026 Mortgage Rate Prediction Mortgage rates should remain within a close range near current rates for most of 2026. Variable mortgage rates will follow the Bank of Canada rates, which are expected to remain flat for the first half of the year. Bond yields could fluctuate with economic news and fixed mortgage rates will follow but are likely to remain within the high-3% to mid-4% range, absent any significant economic surprises. Variable Mortgage Rates in 2026 We expect variable mortgage rates to remain mostly unchanged in 2026, potentially increasing by 0.25% to 0.50% if the Bank of Canada hikes toward year-end. The one huge caveat to this is that if the ongoing trade discussions with the US go poorly, weakening Canada’s economy, there may be an incentive for the Bank of Canada to make some cuts, as long as inflation remains under control. We do not hope for this poor economic news so prefer to not predict it to be likely. Variable mortgage rates are now below fixed mortgage rates and should remain there for the time being. We anticipate five-year variable mortgage rates for the best borrowers to range from 3.4% to 4% throughout the year, depending on any policy shifts. Fixed Mortgage Rates in 2026 We do not expect much change in fixed mortgage rates in 2026, but there is a risk that fixed rates could increase. Bond yields have already priced in limited Bank of Canada cuts and have been stable lately. The recent stability in the US 10-year Treasury yield around 4.2% suggests the bond market is cautious about further cuts. In Canada, bond yields are exactly where they were one year ago, with the five-year Canada bond at 2.88% in late January 2026. We must pay heed to those signals since fixed mortgage rates depend on the bond market. We anticipate five-year fixed mortgage rates to range between 3.7% and 4.3% for most of the year. We rely on market inputs to generate our own expectations for mortgage rates in 2026. Those key inputs include: The Bank of Canada has indicated the current overnight rate of 2.25% is "about right" to keep inflation near 2%, but stands ready to respond if needed; Economists are forecasting moderate Canadian economic growth, which may not require further stimulus; The US Federal Reserve is expected to cut rates gradually in 2026, potentially two to three times, but with uncertainty from trade policies; The US 10-year Treasury yield has hovered around 4.2% in early January 2026; Canadian 5-year bond yields are around 2.88% in late January 2026, flat to a year ago and showing no signs of a downward trend; and Excessive government borrowing puts pressure on bond yields to rise to entice investors to buy the large volume of government debt There are many risks that are not priced in yet that could materialize. Economic weakness or tariff impacts could prompt more rate cuts and lower bond yields. The trade agreement between Canada, Mexico and the US expires this year and needs to be renegotiated. Economic strength or resurgent inflation could lead to hikes and higher rates. There are also political and geopolitical risks that are making headlines that are not in our area of expertise. They are difficult to predict but could significantly impact our interest rate markets in 2026, a year currently marked by uncertainty. What Happened to Mortgage Rates in 2025? In 2025, Canadian fixed mortgage rates remained relatively stable, declining by a modest 0.20% through the year. Canadian variable-mortgage rates declined by 1.0%, in lockstep with the Bank of Canada reducing their target rate by the same amount in 2025. The Canadian market entered 2025 with expectations for gradual Bank of Canada cuts, which materialized with reductions totaling 1.00% from January through October. The first cuts came in January and March (0.25% each), followed by holds through summer, then additional 0.25% cuts in September and October. The end result was a reduction in the overnight rate to 2.25% where it remains as we embark on a new year in 2026. The Bank of Canada rate cuts in 2025 had the expected direct impact on variable mortgage rates, which dropped by the same amount. Fixed rates are ‘forward-looking’, so they moved in anticipation but stabilized as cuts slowed. As the chart shows, fixed mortgage rates have levelled off over the past year.