Is the Bank of Canada Finished With Rate Cuts in 2025?
Here’s What It Means for Your Mortgage Strategy…..
As we move further into 2025, the Bank of Canada’s interest rate policy remains a hot topic across the mortgage and real estate industry. Homeowners, buyers, and investors are asking the same question: Is the Bank of Canada done cutting rates, or will we see further reductions this year?
The answer isn’t straightforward. Economists, lenders, and mortgage professionals across Canada are divided—and this uncertainty is shaping how we advise clients on everything from refinancing to home purchases.
Let’s take a look at the current sentiment in the market, and more importantly, what it means for your mortgage.
Why Some Economists Expect More Rate Cuts in 2025
Economists at TD Economics are forecasting two more rate cuts this year, which would bring the overnight lending rate down to 2.25% by year-end. Their reasoning is based on slowing economic growth, a cooling labour market, and inflation that’s trending closer to the Bank’s 2% target. According to TD’s June 2025 report, a looser monetary policy could give Canadian households a much-needed break from rising living costs and high debt service ratios.
TD Securities has gone a step further, predicting three rate cuts this year in June, July, and September. The goal? To maintain financial stability and protect the Canadian economy from a deeper slowdown.
Why Other Experts Say the Bank of Canada Might Be Done
While some believe the Bank has more cutting to do, others argue we may have already reached the bottom. RBC Economics recently suggested the BoC could be nearing the end of its rate-cutting cycle. With inflation stabilizing in key sectors and global trade risks beginning to ease, the case for more cuts is becoming less certain.
In a June 2025 outlook, RBC’s economists pointed to “resilient growth and fiscal tailwinds” as reasons for the Bank to pause further easing. This sentiment is echoed in Wealth Professional’s coverage of the Bank’s most recent decision, where analysts speculated that rate cuts may already be in the rear-view mirror.
A recent Wall Street Journal survey also noted that two-thirds of economists believe the Bank is more likely to hold steady than introduce additional cuts—at least in the short term. The risk of overcorrecting and reigniting inflation is still top of mind.
Voices from the Canadian Mortgage Industry
Within the mortgage industry, opinions are just as mixed. Beata Caranci, Chief Economist at TD Bank, has forecast a technical recession in the second and third quarters of 2025. She believes the Bank still has room to cut, but warns that lower rates alone may not be enough to boost homebuying activity.
Doug Porter, Chief Economist at BMO, noted earlier this year that future policy decisions will depend heavily on how trade conditions evolve. His view? The Bank of Canada is likely to proceed cautiously, and any additional easing will be data-dependent.
How This Affects Your Mortgage Planning in 2025
If you’re a homeowner or buyer, this mixed outlook creates both risk and opportunity. Here’s how I’m helping clients plan through the uncertainty:
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Rate holds: If you’re thinking of buying a home in the next few months, holding today’s rate gives you protection against sudden increases while still allowing you to take advantage of lower rates if they drop.
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Refinancing: For those carrying high-interest debt or coming up for renewal, refinancing into a lower rate or extending amortization can significantly improve cash flow.
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Variable vs. Fixed: Choosing between fixed and variable rates depends heavily on your risk tolerance, time horizon, and goals. We’re running side-by-side comparisons for clients to show real numbers under both scenarios.
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Investment property strategy: For clients considering using home equity to purchase a rental, we’re modeling both high and low rate environments to test cash flow sustainability.
The Reality: Things Are Up in the Air
After reviewing the data, speaking with lenders, and hearing from other brokers across the country, I agree with the general sentiment—things are still very much in flux. No one, including economists at the major banks, can say for certain whether the Bank of Canada is finished with rate cuts.
That’s why it’s so important to work with someone who’s not just watching the news, but helping you create a personalized mortgage plan that’s flexible enough to adapt as conditions change.
Next Steps: Let’s Build a Mortgage Strategy That Works for You
In a market like this, guesswork isn’t good enough. Whether you’re looking to purchase, refinance, or explore options for investment properties, I can help you make sense of where things stand—and where they might be headed.
I offer:
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Rate holds for up to 120 days
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Full mortgage reviews at no cost or obligation
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Refinancing strategies to improve monthly cash flow
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Support navigating pre-approvals and purchase planning
Reach out today via phone, text, or the contact form on my website. Let’s have a real conversation about what this rate environment means for your home and your financial goals and lets talk mortgages https://calendly.com/lyndsypahl/mortgage-chat
Resources
https://stories.td.com/ca/en/article/bank-of-canada-interest-rate-prediction-june-2025