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The Bank of Canada opted to maintain its benchmark interest rate on Wednesday, a decision poised to have significant implications for homeowners and potential buyers nation-wide.
As highlighted in a recent report by Royal LePage, approximately 1.2 million mortgages in Canada are set for renewal this year. This statistic underscores the potential stakes for many Canadians navigating the current financial landscape.
Phil Soper, CEO of Royal LePage, commented on the Bank of Canada’s choice to keep interest rates at 2.75 percent, indicating that this decision halts a trend of decreasing rates. “While we have experienced a decline in interest rates, the Bank’s decision signifies that we are approaching the end of this downward trend,” he remarked.
Looking ahead, Soper expressed optimism for stability in mortgage costs, stating, “After a year characterized by fluctuating interest rates, we seem to be entering a phase where rates are stabilizing.”
Implications of the Rate Hold for Mortgages
Penelope Graham, a mortgage expert at Ratehub.ca, explained that Wednesday’s decision will not result in any immediate changes to mortgage payments. “Borrowers should understand that there is no immediate relief in sight. For those with variable-rate mortgages, this means their payments, particularly the portion allocated to interest, will remain unchanged,” she stated.
Clay Jarvis, a financial consultant at NerdWallet Canada, noted that a rate cut would not have significantly aided home affordability. He elaborated, “When a reduction is eventually implemented, its primary effect will be on variable mortgage rates, which currently remain higher than fixed rates. Consequently, if borrowers did not qualify for a four percent mortgage previously, they are unlikely to qualify today.”
Interestingly, this decision follows a series of seven consecutive rate cuts by the central bank, which reduced interest rates from five percent to the current level since June of last year.
Jarvis encouraged those among the 1.2 million mortgage renewals this year to actively shop for rates. “This year presents an advantageous situation for comparison shopping, as individuals are not required to undergo a stress test for renewals. It’s advisable to enlist a mortgage broker who can evaluate current offerings, especially since banks are eager for new business,” he suggested.
Graham added that the choice between fixed and variable mortgage rates largely hinges on an individual’s risk tolerance and their ability to navigate the current economic instability influenced by U.S. tariff actions. “Those who are optimistic about future declines in variable rates may find it a worthwhile option, provided they can manage potential increases in payments,” she concluded.
While some industry experts anticipate potential rate cuts later in the year, Graham advised borrowers to meticulously evaluate their financial circumstances due to the ever-changing narrative surrounding tariffs.
The Bank of Canada’s decision to hold interest rates is likely to be disheartening to prospective homebuyers eager to enter the market. However, Soper indicated that many potential buyers are cautious, driven more by economic uncertainty than borrowing costs. “Our findings reveal that it’s not borrowing expenses keeping individuals from entering the housing market. It’s primarily the prevailing uncertainty, akin to why corporate leaders are hesitant to invest—uncertainty breeds reluctance when it comes to major decisions,” he explained.
Recent statistics from the Canadian Real Estate Association (CREA) indicate a 9.3 percent decrease in home sales in March compared to the previous year, with a notable drop of 4.8 percent from the preceding month. Yearly comparisons show national home sales down by 20 percent since November 2024, with the average home price in Canada recorded at $678,331 in March 2025—reflecting a 3.7 percent decline from the same month last year.
Jarvis observed that those able to weather the current market conditions might discover favorable opportunities. “With an increasing inventory, buyers are less likely to face the competitive pressures that typically drive up prices,” he remarked. He specifically pointed out the condo market as an area ripe for first-time buyers, noting, “Current demand is notably low, and many new units are entering the market, prompting developers and agents to seek quick sales.” In essence, Jarvis stated that the condo market, despite lower demand, offers potential for significant deals, although larger properties may entail higher ongoing maintenance costs.
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globalnews.ca