The Bank of Canada stuck with its current interest rate, which had no surprises there. It’s the third meeting in a row with no change to the overnight rate, and most experts saw this coming.
Why the hold? Mainly because inflation is still hanging out above where the BoC wants it (between 1–3%), and the job market continues to look strong. Until inflation shows clear signs of cooling off, don’t expect any big moves from the central bank anytime soon.
Fixed rates have also began increasing with bond yields up at 3.01% at the time of writing this blog(July 31, 2025), the highest they have been since January. This puts future homeowners in a tough spot, especially if they were anticipating rates to come down further this summer.
Trade Jitters Aren’t Moving the Needle (Yet)
You’ve probably heard rumblings about tariffs and trade tensions, especially between Canada and the U.S. While these headlines make noise (and markets sometimes flinch), the BoC isn’t biting unless actual policies change. They made it clear they’re watching how inflation reacts to both the economy slowing and any cost increases from trade disruptions.
From their announcement:
“If the economy weakens and inflation cools off without tariffs pushing prices up too much, then there could be room to cut rates down the road.”
There are three more scheduled BoC announcements left this year: September 17, October 29, and December 10. Most analysts think September will be another “wait and see,” but keep your eyes on the fall. Remember, this has no effect on fixed rates, which can move up or down at any time, mainly based off the bond yields(which you can follow here).
So… Why Are Fixed Mortgage Rates Going Up?
Even though the BoC hasn’t raised rates since March, lenders have also quietly increased fixed mortgage rates. Since mid April, most 3- and 5-year fixed terms have climbed about 0.25% to 0.40%, taking them off the lows we saw earlier this year. Seeing fixed rates below 4% is now becoming increasingly rare, even for insured mortgages(luckily still in the 3.84-3.94% range, which we were previously seeing as low as 3.59-3.69% in some cases for 3/5 year fixed terms).
What’s behind it? A mix of strong job data, sticky inflation, and those trade threats we mentioned earlier. All that is pushing bond yields higher.
For those still in the market to renew, purchase, or refinance, It might be a good time to lock in a rate and avoid potential increases. If rates drop prior to your closing/renewal date, you can still take advantage of the lower rates offered by having your lender apply a ‘float down’ to your approval. They can do this as many times as required up until a few days before your closing date. Your broker should be able to request this for you, as well as monitor the markets for any potential lower rates outside of your approved lender.
TL;DR for Homeowners and Buyers:
- BoC is holding rates steady, but one cut could still come later in 2025; if inflation drops enough.
- Fixed mortgage rates are already climbing thanks to bond market moves.
- Next rate decisions to watch: September 17, October 29, December 10.
- If you’re within 4 months of closing, lock in your rate now to protect your budget.
Final Thoughts
Yes, the Bank of Canada held steady today, but that doesn’t mean your mortgage won’t cost more tomorrow. With fixed rates trending upward and markets jittery from trade noise, waiting too long could cost you. Fixed rates have been on a rollercoaster this year, and I always advise locking in now to protect yourself from any further potential increases.
Have questions or want to lock in today’s lowest available rates? Reach out; we’ve got your back.
