Mortgage Minute – July 18, 2025
This week, the pressure on borrowers is intensifying from all sides. Rising fixed mortgage rates and a firm Bank of Canada are colliding with a complex renewal landscape, all while new data reveals a conflicted housing market and deep financial anxiety among Canadians.
Here’s the breakdown.
The Interest Rate Squeeze Intensifies
Fixed mortgage rates are creeping upward again, fuelled by a rebound in government bond yields. At the same time, any lingering hopes for a Bank of Canada interest rate cut this month have likely ended. Strong June employment data and an inflation rate that ticked up to 1.9% give the central bank every reason to hold its policy rate steady at its July 30th meeting. This means the cost to lock in is rising, with no immediate relief expected for those with variable-rate mortgages.
A Tale of Two Renewals
An estimated 60% of all Canadian mortgages are set to renew in 2025 or 2026, but the impact will not be uniform. While borrowers with five-year fixed-rate mortgages face the sharpest impact with potential payment hikes of 15% to 20% , the Bank of Canada projects that about 25% of all mortgage holders could see their payments decline. This includes many with variable-rate, variable-payment mortgages who may see a 5% to 7% drop. Your specific outcome depends entirely on the type of mortgage you hold.
A Conflicted Market and Anxious Consumers
The housing market is sending mixed signals. June home sales rebounded, rising 3.5% compared to last year. However, the Canadian Real Estate Association (CREA) simultaneously cut its annual forecast for home sales and prices for a second time, citing tariff uncertainty and bearish market psychology holding back buyers. This market conflict is happening as new polling reveals deep financial anxiety among Canadians. Nearly two-thirds (64%) say they desperately need interest rates to drop , while 41% are concerned that rising mortgage rates could push them toward bankruptcy.
My Take
This week’s data confirms that uncertainty is the new normal. We have a market that wants to move forward but is being held back by economic headwinds and rate pressure. For anyone with a mortgage decision on the horizon, navigating this requires a shift from broad market-timing to a focus on your own specific financial structure and a clear, documented plan.
Want to know how this week’s news impacts your mortgage plans? Let’s chat.
Sources:
“Is it time to lock in that variable mortgage rate?,” MortgageLogic.news, July 2025
“Majority of mortgage holders to see rate hikes upon renewal,” Canadian Mortgage Professional, July 17, 2025
“Fixed mortgage rates creep higher as bond yields rise,” Canadian Mortgage Trends, July 16, 2025
“Canada inflation jumps, likely torpedoes rate cut hopes,” Canadian Mortgage Professional, July 15, 2025
“CREA cuts 2025 forecast again but says home sales are rebounding from ‘chaotic start’,” Canadian Mortgage Trends, July 15, 2025
“Poll: 64% of Canadians desperately need interest rates to drop,” Canadian Mortgage Professional, July 15, 2025
“Canada’s mortgage renewal wave: Here’s what to expect,” Canadian Mortgage Professional, July 14, 2025