The central bank is readying its final decision of the year
The Bank of Canada looks set to pause its easing cycle at its December 11 announcement, with recent data pointing to an economy that has sidestepped technical recession but remains fragile and uneven for borrowers and lenders alike.
Stronger‑than‑expected third‑quarter growth and stickier inflation has reduced the odds of another cut in the near term, economists said, even after the central bank lowered its policy rate to 2.25% at its October meeting.
Ratehub.ca mortgage expert Penelope Graham said the October move had effectively set the stage for a holding pattern rather than a fresh round of stimulus.
“Its Governing Council clearly indicated they feel the current policy rate level is right to support the economy and temper inflation, while also pointing out that monetary policy can only do so much while businesses adapt to the current trade scenario,” she said.
“Fiscal support will be needed to support affected industries, rather than lower interest rates alone,” she said.
Stronger GDP, stubborn inflation shape rate path
Recent GDP and inflation prints has supported the case for a hold. The economy avoided a second consecutive quarter of contraction, removing the immediate risk of a technical recession and leaving “little reason to heap on stimulus now,” Graham said.
She noted that while headline inflation around 2.5% remained above target, the Bank viewed earlier price pressures as easing and expected shelter and goods costs to moderate, limiting the case for either further cuts or a renewed hike.
Those dynamics echo the Bank’s October statement that the current policy rate was “about the right level” to keep inflation near 2% while the economy adjusted to weaker global trade and tariffs.
Mortgage borrowers face narrow window on rates
For housing and mortgage markets, Graham described a cautious recovery after the sharp slowdown of 2023–24.
“While Canada’s housing market continues to lag last year’s levels, buyer demand has edged up steadily over the past six months,” she said.
“Home prices, meanwhile, have yet to re‑heat, and plenty of available inventory has made for buyer‑friendly conditions in most Canadian markets.”
Still, she warned that variable‑rate borrowers should not expect further immediate relief.
“Given the Bank’s stance and economic landscape, it’s unlikely variable mortgage rates will decrease in the near future,” she said.
“However, current variable rate pricing is still the best it’s been since 2022, with five‑year terms as low as 3.45%.”
Fixed mortgage rates also remained competitive but were facing “upward pressure as bond yields climb,” Graham said, a trend mirrored in other forecasts pointing to only modest further rate declines despite the October cut.
With affordability still stretched in major centres and stress‑test hurdles limiting borrowing capacity, Graham urged borrowers approaching renewal or purchase to move early.
“Anyone shopping for a mortgage rate, or coming up for renewal on their existing one, should take out a rate hold and pre‑approval immediately, in order to guarantee access to today’s attractive rates,” she said.
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