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The Short Answer: Not Really — and Fixed Rates May Keep Rising for Now

If you’re wondering whether mortgage rates are going down this year, the answer is: not yet. Variable rates have dipped slightly, but fixed rates are still rising in 2025 due to higher bond yields. So if you’re waiting for rates to fall before making a move, you may be in for a longer wait.

Bank of Canada Is Lowering Rates — But Slowly

The Bank of Canada started cutting interest rates in 2024 after inflation cooled down from its peak. As of mid-2025, the Bank’s key interest rate is around 2.75%, down from the highs of 2022–2023.

This means variable-rate mortgages have started to come down—but only a little. The Bank is being cautious because the economy is still growing faster than expected, and inflation (while lower) hasn’t fully gone away.

So yes, the central bank is helping, but it’s not enough yet to bring down all types of mortgage rates.

Bond Yields Are Rising — Pushing Fixed Rates Up

Fixed mortgage rates in Canada are mostly based on 5-year government bond yields. When these yields go up, lenders raise fixed mortgage rates to cover their own borrowing costs.

In 2025, bond yields have climbed again because:

Canada’s economy is stronger than expected, which makes investors think interest rates could stay higher for longer.

The federal government is borrowing more money, which puts pressure on bond markets and increases yields.

The U.S. economy is also heating up again, with talks of new tariffs, inflation concerns, and fewer rate cuts than expected. This global pressure spills into Canada.

As a result, 5-year fixed mortgage rates have gone up, even though the Bank of Canada is cutting its rate.

Variable Rates Are Going Down — Only Slightly

If you have a variable-rate mortgage (or are thinking about getting one), there is some good news:

Variable mortgage rates are falling slowly as the Bank of Canada cuts its rate.

This may continue if inflation continues to ease and the economy slows a little more.

But the savings aren’t huge yet. Many variable rates are still above 5%, and payments are only coming down a little at a time. So while variable rates may become more attractive by late 2025, they’re still not "cheap" by historical standards.

Fixed Rates May Stay High (Or Climb Higher)

Even if variable rates are going down, fixed rates are likely to stay elevated in the short term. In fact, they could rise further if:

Bond yields keep climbing

Government borrowing increases

Inflation surprises the market again

If you’re considering a fixed-rate mortgage right now, know that you might be locking in near the top of the rate cycle—unless the bond market shifts quickly.

Refinancing or Consolidating Debt? Don’t Wait!

If you’re considering using your home equity to pay off high-interest debt or refinance your mortgage, don’t get caught waiting around for rates to drop.

A small change in interest rates—up or down—won’t make a massive difference when it comes to debt consolidation. But delaying action could cost you thousands in extra interest on credit cards or other unsecured loans.

For example:

Credit cards often charge 20%+ interest

Even a home equity loan at 8–10% could cut that in half

Consolidating into one monthly payment can improve your cash flow and reduce financial stress immediately

The key is to focus on the overall savings, not just the exact rate. A qualified mortgage broker can run the numbers for you and show how much you could save—even in today’s market.

So instead of waiting for the “perfect” rate, take control of your finances now. You might be surprised how much relief a smart refinance or debt consolidation plan can bring.

Renewing Your Mortgage in 2025? Start Early

If your mortgage is coming up for renewal this year, now’s the time to start exploring your options—even if your renewal date is still months away.

Don’t just sign your bank’s renewal offer without looking around. It might not be the best rate or product for your situation. Working with a mortgage broker early can give you access to better options and more time to make the right decision.

Here’s why this matters:

A broker can hold a rate for up to 120 days, protecting you from potential rate hikes

They can compare offers from multiple lenders, not just your current one

They’ll review your finances and goals to make sure the new mortgage fits your needs

Renewing doesn’t mean you have to stay where you are. With the right advice, you can take this opportunity to adjust your mortgage to better suit your current life and financial goals—whether that means changing terms, switching lenders, or accessing some equity.

What Needs to Happen for Mortgage Rates to Fall?

For mortgage rates to truly start falling across the board, we’ll need to see:

Slower economic growth — This would give the Bank of Canada more confidence to cut rates faster.

Lower bond yields — If investors feel more secure and inflation risks fade, bond yields would drop, and fixed rates would follow.

More stable global markets — Canada is heavily influenced by what’s happening in the U.S. If their rates drop, ours likely will too.

Until then, the pressure is still upward for fixed rates and only slightly downward for variable ones.

What Should You Do in 2025?

Here’s a quick guide, depending on your situation:

If You’re Getting a Mortgage:

Fixed rate: Good if you need payment certainty, but be aware rates are still high.

Variable rate: Better if you can handle some risk and expect more rate cuts in the coming year.

If You Already Have a Mortgage:

Fixed rate: You’re protected from rising rates for now. Sit tight.

Variable rate: You may start seeing savings, but changes will be gradual.

Tip: Work With a Mortgage Broker

A broker can shop around for the best rate.

They can access lenders that aren’t available to the general public.

They’ll also help you decide whether to wait, refinance, or lock in now.

Forecast: Mortgage Rates May Stay High For Now

If inflation keeps cooling and the economy begins to slow, there’s a chance the Bank of Canada will continue cutting rates into 2026. This could bring variable rates down further.

Fixed rates, however, depend on bond yields—which can be unpredictable. They might drop too, but only if:

Inflation expectations fall

Bond markets calm down

Government borrowing levels stabilize

Until these factors shift, don’t expect fixed rates to fall overnight.

Are Mortgage Rates Going Down in Canada in 2025?

In summary:

Rates are not dropping quickly, especially fixed rates

Variable rates are improving slowly, but it’ll take time

The mortgage market is still in a high-rate environment, so make careful, informed decisions

Don’t assume the past (ultra-low rates) is coming back anytime soon

Best Advice?

Stay flexible and talk to a pro. A mortgage broker can help you:

Compare real-time rates from different lenders

Understand pros and cons of fixed vs variable

Find the best option based on your budget and goals

Whether you’re buying, renewing, or refinancing, it’s still possible to get a smart mortgage in 2025—you just need the right guidance.