Bank of Canada Holds Rate as Fixed‐Rate Mortgages Tick Up

This morning, the Bank of Canada delivered its fifth scheduled policy announcement of the year, opting to keep its overnight rate unchanged… a decision in line with most analysts’ forecasts. Strong employment figures and stubbornly elevated inflation have kept the central bank on pause for a third straight meeting. While many economists still anticipate at least one rate cut before the end of 2025, those reductions must await a clear return of inflation to the BoC’s 1–3 percent target band.

Trade Tensions and Tariff Threats Stall Further Easing

Despite repeated threats of new U.S. tariffs… most recently President Trump’s looming deadline of August 1 for a Canada–U.S. trade deal, the Canadian economy has so far shrugged off the rhetoric. Markets have grown wary of reacting to unbacked statements, and bond yields have become seemingly more reluctant to move before concrete measures are taken. In other words, talk alone won’t deter the BoC from maintaining its wait-and-see stance.

From Wednesday’s announcement: 

You can read the full announcement here.

With three more rate announcements scheduled for this year… September 17, October 29 and December 10, the BoC is widely expected to hold in September before potentially moving in either October or December, depending on how data evolves in the coming months. 

Why Fixed Mortgage Rates Are Rising

Although the BoC’s last rate cut was on March 12th, many lenders have already pushed their fixed mortgage rates higher. Since early April, 3 and 5 year fixed mortgage rates have climbed roughly 0.25–0.40 percent, reversing their three-year lows notched earlier this spring.

Bolstered by strong labour market reports and lingering inflationary pressures and by the spectre of U.S. tariffs, bond yields surged from their three-year low in April, lifting the cost of fixed-rate funding for lenders. While bond yields have eased slightly from July’s highs, the overall trend still points upward.

Today, most fixed rates are in the low 4% range for both 3 and 5 year terms. A small handful of institutions continue to offer rates starting in the high 3 percent range for some situations, but we expect another one to inch its pricing up later this week. If your purchase or mortgage renewal closes within the next 120 days, you should seriously consider locking in your rate as soon as possible.

Bottom Line for Borrowers

• Policy outlook: One BoC rate cut looks likely before year-end, but only once inflation is convincingly on a downward path… tariff developments notwithstanding.

• Fixed-rate environment: Bond yields remain under upward pressure, and fixed mortgage rates have already begun to climb. Act now if you want to ensure you receive the lowest rate possible.

• Key dates ahead: September 17, October 29 and December 10 are your next chances to see shifts in BoC policy… although the September decision is expected to be unchanged. We’ll know soon enough. 

Final Thoughts 

Economic forecasts are always in flux, especially amid an unpredictable trade dispute. While today’s Bank of Canada pause was anticipated, the timing and size of future moves depend on real policy actions and clear inflation data, not just on headlines out of Washington. In the meantime, fixed mortgage rates continue to drift higher. 

As always, the financial world can be unpredictable and anything can happen. Time will tell. 

Contact us today for the lowest mortgage rates available to you. 

Other recommended recent blogs: 

Fixed vs Variable: How to Decide in Today’s Mortgage Market

3 Year vs 5 Year Fixed: The Mortgage Shift No One’s Talking About