Mortgage Rates Gearing to Climb Again in 2025 — & What To Do About It
Image courtesy of Better Dwelling
If you’ve been waiting for mortgage rates to drop before locking in your next home—or renewing your current loan—you may want to reconsider that strategy.
Fresh inflation data from earlier this month has pushed Canadian bond yields sharply higher, and that means fixed-rate mortgage rates are heading up too.
Whether you’re buying, renewing, or refinancing, understanding what’s driving this change could save you thousands—or cost you thousands if you wait too long.
🔍 Why Are Rates Rising Again?
When most people think about mortgage rates, they think about the Bank of Canada. And yes, the BoC’s overnight rate does affect variable-rate mortgages directly.
But fixed-rate mortgages—like the 5-year fixed many Canadians choose—are tied to the 5-year Government of Canada (GoC) bond yield. And this week, that bond yield jumped significantly because of rising inflation concerns.
Here’s a quick breakdown of what happened:
5-year GoC bond yields jumped 18.3 basis points (bps) in just a few days.
The new rate is 2.961%, up from around 2.78% last week.
That wipes out any rate relief seen earlier in 2025 and pushes rates higher than where they started this year.
Lenders typically add a 150–200 bps margin on top of the bond yield. That means you could soon see 5-year fixed mortgage rates jump to between 4.46% and 4.96%, depending on the lender and your application profile.
📊 Real-Life Impact: What This Could Cost You
Let’s say you’re considering a $600,000 mortgage. Here’s what the monthly payment difference could look like:
That’s nearly a $200/month difference, or $2,400 more per year—just because of a rate increase driven by inflation and bond markets.
If you’re waiting for rates to fall, the bond market just gave you a clear message: it might not happen anytime soon.
⚠️ Why Inflation Is Fueling the Fire
While the recent inflation headline looked positive (thanks to a drop in the carbon tax), the core inflation numbers—what the Bank of Canada actually watches—are telling a different story.
Both key CPI-core measures are now above the BoC’s comfort zone, meaning the central bank may delay rate cuts longer than expected. In fact, some experts are now worried that the Bank of Canada may have moved too quickly to ease policy earlier this year, and could be forced to pivot again.
Bottom line? Don’t expect rates to come down in the short term.
🧭 What Should You Do Next?
Whether you’re:
Renewing your mortgage soon,
House hunting this summer,
Or considering a refinance to consolidate debt or free up cash flow…
The next few weeks could be critical. A small move in bond yields can change your borrowing cost by thousands, and in today’s fast-moving market, waiting could mean paying more—possibly much more.
🤝 How I Can Help
As Mr. Mortgage, I help clients across Ontario find the best mortgage strategy for their needs, not just the lowest rate. I’ll help you:
Lock in a competitive rate before they rise further
Understand if a fixed or variable option makes more sense for your goals
Review pre-approvals to ensure you’re protected against rate increases
Strategize around upcoming renewals or refinances
Let’s get ahead of the market—not behind it. 📲 Call or text me at (647) 554-2718
