The Canadian mortgage market has been shifting significantly in 2025, with both fixed and variable rates responding to the Bank of Canada's (BoC) monetary policy changes. If you're a homeowner or a prospective buyer, you may be wondering whether now is the time to secure a mortgage—and if so, which type offers the best deal. Let's break down the latest trends.
Fixed Mortgage Rates: A Drop Worth Noting
Over the past year, fixed mortgage rates in Canada have been declining. This follows a series of rate cuts by the Bank of Canada, which has been steadily lowering its benchmark interest rate. On January 29, 2025, the BoC reduced its Overnight Lending Rate by 0.25%, bringing it down to 3.00%. This was the sixth consecutive rate cut since June 2024, a clear signal that borrowing costs are easing.
In response, major Canadian banks have been adjusting their fixed mortgage rates downward. As of early March 2025, some lenders are offering five-year fixed rates just under 4%. Several big banks have also joined this trend, with at least one dropping its five-year fixed rate to 3.99%. These are some of the lowest fixed mortgage rates seen in years, making them a compelling option for borrowers seeking stability in their payments.
Variable Mortgage Rates: A Game of Timing
Variable mortgage rates, which fluctuate based on the prime lending rate, have also been impacted by the Bank of Canada's rate cuts. With the central bank continuing its monetary easing, borrowers with variable-rate mortgages have seen their rates decline as well.
Since variable rates move in response to the BoC's policy decisions, they remain an attractive option for those expecting further rate cuts in 2025. While there's no guarantee of continued reductions, the BoC has hinted at the possibility of additional cuts depending on inflation trends and economic performance.
For borrowers who can handle some level of uncertainty, variable rates offer the potential for even lower costs over the coming months. However, if rates begin to rise again, those with variable-rate mortgages could see their payments increase.
Should You Choose Fixed or Variable?
Deciding between a fixed or variable mortgage depends on your financial situation and risk tolerance. If you prefer predictability and want to lock in historically low fixed rates, now may be a great time to secure a long-term deal. On the other hand, if you're comfortable with some risk and believe rates will continue to fall, a variable mortgage could provide significant savings.
Regardless of your choice, the current mortgage market offers some of the most competitive rates we've seen in recent years. Whether you're refinancing, renewing, or purchasing a new home, now is an excellent time to explore your options and take advantage of favorable conditions.
Final Thoughts
With fixed mortgage rates dropping and variable rates responding to central bank cuts, Canadian borrowers have an opportunity to secure historically low mortgage costs. If you're in the market for a mortgage, consider speaking with a broker or lender to compare rates and find the best solution for your financial needs. The key is to stay informed and act while rates remain in your favor.
Fixed Mortgage Rates: A Drop Worth Noting
Over the past year, fixed mortgage rates in Canada have been declining. This follows a series of rate cuts by the Bank of Canada, which has been steadily lowering its benchmark interest rate. On January 29, 2025, the BoC reduced its Overnight Lending Rate by 0.25%, bringing it down to 3.00%. This was the sixth consecutive rate cut since June 2024, a clear signal that borrowing costs are easing.
In response, major Canadian banks have been adjusting their fixed mortgage rates downward. As of early March 2025, some lenders are offering five-year fixed rates just under 4%. Several big banks have also joined this trend, with at least one dropping its five-year fixed rate to 3.99%. These are some of the lowest fixed mortgage rates seen in years, making them a compelling option for borrowers seeking stability in their payments.
Variable Mortgage Rates: A Game of Timing
Variable mortgage rates, which fluctuate based on the prime lending rate, have also been impacted by the Bank of Canada's rate cuts. With the central bank continuing its monetary easing, borrowers with variable-rate mortgages have seen their rates decline as well.
Since variable rates move in response to the BoC's policy decisions, they remain an attractive option for those expecting further rate cuts in 2025. While there's no guarantee of continued reductions, the BoC has hinted at the possibility of additional cuts depending on inflation trends and economic performance.
For borrowers who can handle some level of uncertainty, variable rates offer the potential for even lower costs over the coming months. However, if rates begin to rise again, those with variable-rate mortgages could see their payments increase.
Should You Choose Fixed or Variable?
Deciding between a fixed or variable mortgage depends on your financial situation and risk tolerance. If you prefer predictability and want to lock in historically low fixed rates, now may be a great time to secure a long-term deal. On the other hand, if you're comfortable with some risk and believe rates will continue to fall, a variable mortgage could provide significant savings.
Regardless of your choice, the current mortgage market offers some of the most competitive rates we've seen in recent years. Whether you're refinancing, renewing, or purchasing a new home, now is an excellent time to explore your options and take advantage of favorable conditions.
Final Thoughts
With fixed mortgage rates dropping and variable rates responding to central bank cuts, Canadian borrowers have an opportunity to secure historically low mortgage costs. If you're in the market for a mortgage, consider speaking with a broker or lender to compare rates and find the best solution for your financial needs. The key is to stay informed and act while rates remain in your favor.