TL;DR
- No change to the overnight rate: it remains at 2.75%
- Prime rate holds at 4.95% (TD customers: 5.10%)
- Tariff impacts and early-year import/export activity masked real economic strain
- Rate cuts likely ahead, with the first expected by July
- 1.25 million mortgage renewals expected in 2025–2026: banks are hungry for your business
- Housing market still showing signs of life, despite media doom and gloom
Why Was the Rate Held?
The Bank of Canada cited stronger-than-expected Q1 performance as the main reason for pausing any additional rate cuts—for now. But the context behind that growth matters: many businesses rushed to import/export goods ahead of new U.S. tariffs, effectively front-loading economic activity.
With new tariffs from the U.S.—including a devastating 25% increase on steel and aluminum, bringing the total to 50%—that growth is unlikely to continue. These pressures are expected to ripple through the economy in the coming months, increasing unemployment and slowing production.
In short: the Bank didn’t cut rates today, but the data suggests they’ll need to soon.
What to Expect Next
Looking ahead, the expectation is for at least 50 basis points of rate cuts in 2025, with the first possibly arriving by July. The Bank will be watching economic indicators closely—unemployment, inflation, GDP—before making any further moves.
If you’re in a variable rate mortgage, now may not be the time to panic. Many borrowers are still sitting in discount ranges like Prime -0.75% to Prime -1%. If you're concerned, locking in something under 4% (if available) could be a smart hedge.
Mortgage Renewals: A Massive Opportunity
With 1.25 million mortgage renewals coming in the next 18 months, banks are more motivated than ever to retain customers. If you’re renewing, you have leverage.
At Pilot Mortgage Group, we’re seeing rates as low as 3.75% for renewals—often through a bit of negotiating. Remember: your bank’s job is to make money, not save you interest. A little strategy can go a long way.
Good news? About 80% of our clients have successfully renewed with their existing lender with minimal paperwork. If you're up for renewal, now’s the time to review your options.
What’s Really Happening in the Housing Market?
The media loves a crisis, but the real story is more nuanced.
Yes, condo markets in pockets of Ontario and Vancouver are soft. But townhomes and single-family homes in desirable areas are holding value, and some are still seeing multiple offers.
What’s driving the sluggishness isn’t necessarily pricing—it’s consumer sentiment. Canadians are waiting, watching headlines, and hesitating. That pause in momentum, however, can create opportunities for buyers looking to upsize or invest.
Final Take
The current interest rate environment—still in the 4% range—is historically competitive. Compared to the last two decades, you’re still in a strong position.
Markets are volatile. Tariffs are here. But strategic mortgage planning, especially around renewals and refinancing, can help you win no matter what direction things move.
Need a second opinion on your mortgage? Reach out to us at Pilot—we’d be happy to walk you through your options and help you build a plan.
Tyler from Pilot Mortgage Group Your go-to for straightforward, strategic mortgage advice.
Stay informed. Stay prepared.
