Renewing your mortgage? What the Bank of Canada’s rate cut means for you

According to the Bank of Canada’s research, 60 per cent of all Canadian mortgages will be up for renewal in 2025 and 2026. What does the most recent rate cut mean for you?

As the Bank of Canada on Wednesday lowered its overnight benchmark by 25 basis points from 2.75 per cent to 2.5 per cent, experts say homeowners looking to renew their mortgages have a chance to save.

Commercial lenders, like private banks, base their rates on the key policy rate set by the central bank. According to the Bank of Canada’s own research, 60 per cent of all Canadian mortgages will be up for renewal in 2025 and 2026.

Variable-rate mortgages are determined by the central bank’s interest rates, while fixed-rate mortgages are determined by activity in the bond market.

“Renewing a mortgage got a little easier on Wednesday, but only if you’re sniffing out a variable rate,” said Clay Jarvis, mortgage expert at NerdWallet Canada.

“Variables have dipped by up to 30 basis points at some lenders, and are well below four per cent at some brokerages and online lenders.”

Those looking to wait a little longer to see if the bank cuts rates further should lock down a rate sooner rather than later, said Penelope Graham, mortgage expert at Ratehub.ca.

“If you’re someone who is strongly considering getting a variable mortgage rate and you’re wondering if you should wait until perhaps October or December (for the next interest rate cut), it’s actually a great idea to get a rate hold now for up to 120 days,” she said.

“Even if we do get a couple more rate cuts, you will still enjoy whatever those lowest rates now are.”