BoC Holds Rate While Fixed Mortgage Rates Increase – Best Mortgage Broker Rates

As expected, the Bank of Canada (BoC) maintained their overnight rate in their first scheduled rate announcement of the year. It’s now been six months since the last hike. The BoC remains concerned about inflation risks; however, they are still expecting to reach their inflation goal of 2.00% at some point in 2025.

They have stated on numerous occasions that they are not prepared to lower their rate until they are convinced that they’ll achieve this goal.

Timeline for Expected Rate Cuts

Despite last week’s disappointing inflation surprise, economists are expecting the first cut from the Bank of Canada this spring, potentially as soon as April 10th.

• They will be watching inflation closely.

• If inflation remains ‘sticky’, rate cut forecasts could be delayed further.

• Fortunately, economists are sounding optimistic about their predictions.

The Bank of Canada has continually stated they are prepared to increase rates further if needed. While they haven’t officially ruled out additional hikes, this suggestion has been removed from recent press releases, which is promising.

During a press conference in Ottawa, BoC Governor Tiff Macklem said:

“We know Canadians want to see interest rates come down. So do we. We want to be convinced we’re on a path back to two percent inflation. When we have more assurance that we’re on that path, we can start discussing lowering interest rates… but we’re not there yet.”

Fixed Mortgage Rates Increasing

Despite the Bank of Canada holding their rate, upward pressure remains on fixed mortgage rates.

• Bond yields have been rising since the beginning of the year, with a further spike last week.

• Many lenders have not increased their rates yet, but some promotional rates have disappeared.

Examples:

• Lowest 5-year fixed rate: 4.69% → 4.94% (increase of 0.25%).

• Lowest 3-year fixed rate: 4.99% → 5.24%.

Bond yields have been relatively flat for the past week, but there’s no guarantee the upward trend won’t resume. If yields continue to rise, more lenders are likely to increase their fixed rates. Eventually, yields may trend back down, which would then push fixed mortgage rates down.

Locking in a Rate to Maximize Savings

Waiting to lock in a rate is risky. While yields may have stabilized temporarily, they remain in a danger zone where rates could rise at any moment.

• For purchase closings or mortgage renewals in the next 120 days, it’s recommended to contact a broker to lock in the lowest eligible rate.

• Even if rates drop after locking in, rates can often be adjusted downward before closing.

Some banks have been extremely aggressive with low rates for clients, though the longevity of these offers is uncertain. Locking in early ensures maximum savings and peace of mind.

Conclusion

It’s promising that the BoC is no longer discussing potential rate hikes. Economists remain optimistic that rate cuts may begin as soon as April, though timing is uncertain.

While forecasts are encouraging, history has shown they can be wrong. Anything can happen, and borrowers should stay informed and be prepared to act when the opportunity arises.

About the Author

Paul Meredith is the author of the Amazon #1 best-selling book Beat the Bank – How to Win The Mortgage Game in Canada, and has ranked as one of the top 75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage Broker of the Year in 2018–2021 and 2023, and can be seen as the exclusive mortgage broker on seasons 2 and 5–7 of TV’s Top Million Dollar Agent (Global, Slice TV, and Rogers).