At RTS Mortgage Financial, we believe in keeping Canadians informed about the financial decisions that affect their path to homeownership. Today, the Bank of Canada announced it will hold its benchmark interest rate at 2.75 percent. This decision impacts both homebuyers entering the market and homeowners renewing their mortgages, as the interest rate environment continues to play a crucial role in affordability.
The prime rate, which is directly influenced by the Bank of Canada decision, will remain at about 4.95 percent. For now, this means variable-rate mortgage holders will see no change in their monthly payments, and fixed mortgage rates are unlikely to shift significantly in the short term.
Why the Bank of Canada Held the Interest Rate
The Bank of Canada has several reasons for maintaining the current rate:
- Inflation remains elevated. Core inflation is hovering around 3 percent, above the Bank’s target range of 1 to 3 percent. Lowering rates too quickly could push inflation even higher.
- Economic uncertainty. Global trade conditions, particularly between Canada and the United States, remain unpredictable.
- Moderate economic growth. Canada’s job market is stable, and growth is steady but not strong enough to justify a rate hike or a cut at this time.
Impact on Homebuyers
For homebuyers, today’s decision does not ease affordability concerns. Higher borrowing costs compared to previous years make it more difficult for first-time buyers to qualify for a mortgage. The mortgage stress test continues to challenge affordability, and this rate hold does not provide relief.
Variable-rate mortgage seekers will see no change in their rates since they are tied to the prime rate. Fixed-rate borrowers might benefit if bond yields trend downward, but today’s Bank of Canada decision alone will not cause fixed rates to drop.
Impact on Homeowners
For homeowners with variable-rate mortgages, payments will remain the same for now. However, those approaching renewal should prepare for potentially higher payments compared to their current term, especially if they locked in during the low-rate environment of previous years.
Fixed-rate mortgage holders will not be affected until renewal, but it is important to budget ahead and explore options early.
What This Means for the Housing Market
The decision to hold the interest rate does not bring immediate relief to Canada’s housing market. Affordability challenges remain for both homebuyers and homeowners looking to move. High mortgage rates continue to limit the number of qualified buyers, slowing sales activity and keeping the market in a holding pattern.
Without a Bank of Canada rate cut, there is little incentive for buyers to rush into the market. Until borrowing costs decline, affordability will remain one of the biggest barriers to homeownership.
Looking Ahead
The Bank of Canada has not ruled out lowering rates in the future, but any change will depend on inflation trends and economic stability. For now, Canadians should expect interest rates to remain at current levels for the foreseeable future.
RTS Mortgage Financial Advice
If you are thinking about buying a home, now is the time to review your mortgage options and plan your financing carefully. For homeowners, especially those with upcoming renewals, taking proactive steps today could save you money and stress later.
At RTS Mortgage Financial, we work with our clients to secure the most competitive rates and mortgage solutions available. Whether rates are rising, falling, or holding steady, we are here to help you make confident decisions about homeownership.
Contact RTS Mortgage Financial today for a personalized mortgage review and expert guidance.
Call us at: 647-580-7421
Email us at: kj@rtsmortgagefinancial.com
Visit us at: www.rtsmortgagefinancial.com