*BREAKING* Bank of Canada Announces Rate Hold!
*BREAKING* Bank of Canada Announces Rate Hold!
Date Posted: June 4, 2025
The Rate Announcement
The Bank of Canada has maintained its overnight rate at 2.75%, a decision that directly affects variable mortgage rates and influences fixed rates. This pause indicates a cautious approach in response to ongoing economic uncertainty, suggesting that mortgage rates are unlikely to change significantly in the near term. In the housing sector, activity has declined, primarily due to a sharp drop in resale transactions. This cooling trend reflects weakening consumer confidence and rising unemployment, which now stands at 6.9%. Slower consumption growth and labour market softness, particularly in trade-sensitive sectors, are further dampening demand in the housing market.
What Does This Impact?
The Bank of Canada’s target overnight policy rate affects the interest you pay from lenders like banks. The higher the overnight rate, the more interest you will pay. The June 2025 rate hold from the Bank of Canada means that variable and adjustable mortgage holders will see no change in their interest costs and no change in their mortgage payments. Fixed rate mortgages are not as directly impacted by the BOC rate announcement, however the bond markets which influence fixed rates have largely already built in the expected rate hold.
Getting Back on Track
While business investment has remained resilient, overall domestic demand is subdued, offering little upward pressure on home prices. Inflation dynamics are also shifting. Headline inflation eased to 1.7%, largely due to the removal of the federal carbon tax, but core inflation rose to 2.3%, exceeding expectations. This increase is being driven in part by tariffs, which could raise construction and renovation costs. Surveys show that many businesses plan to pass these higher costs on to consumers, potentially impacting housing-related expenses.
The next rate announcement is scheduled for July 30th, 2025.
If you have questions about your own mortgage, and the best strategy for you, please contact your broker today.
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