Will the Bank of Canada Cut Rates Again in 2025?

Renee Huse, founder of Spire Mortgage Team in Alberta, works with clients across Alberta who are watching rates closely — and for good reason. After the Bank of Canada slashed its overnight rate from 5.00% to 2.75% over the past year, many homeowners expected mortgage rates to follow suit. But that hasn’t happened — and people are now asking: Are more cuts coming, or are we at the bottom of this cycle?

In this blog, we’ll break down what’s likely next from the BoC, how the big banks are forecasting the rest of 2025, and what smart Alberta borrowers are doing right now to protect themselves — even in a sticky rate market.

Quick Navigation

• When Will the Bank of Canada Cut Rates Again?
• Why Aren’t Mortgage Rates Dropping With the Bank of Canada?
• What Are Clients Doing Right Now?
• Alberta Case Study: Renewing in a Sticky Rate Market
• Glossary of Key Terms
• FAQs About Rate Cuts and Renewals in 2025

When Will the Bank of Canada Cut Rates Again?

The Bank of Canada has already delivered 225 basis points in cuts — but the momentum is slowing. Here's where things stand:

• Current BoC rate: 2.75%
• Next announcement: July 30, 2025
• Odds of a cut: 28%
• Odds of no change: 72%

The Three Camps

1. The “No More Cuts” Camp:
RBC believes we’re done. They expect 2.75% to be the floor, with rates holding steady into 2026 due to stubborn inflation, strong wage growth, and solid economic performance.

2. The “One More Round” Camp:
BMO and National Bank forecast a final round of easing, pushing the BoC rate down to 2.00% by early next year. Their view is that the economy is showing enough softness to warrant further cuts.

3. The “Middle Ground” Camp:
TD, Scotiabank, and CIBC expect rates to settle at 2.25%, with one more cut likely before the end of 2025 — but no big surprises after that.

What It Means for Alberta

If you're in Calgary, Airdrie, Red Deer or Grande Prairie, the key message is this: we’re near the bottom, and deep rate cuts are unlikely. If you're sitting on the sidelines waiting for a miracle rate drop, it might be time to reset expectations — and build a smarter strategy now.

Why Aren’t Mortgage Rates Dropping With the Bank of Canada?

It’s a fair question — and one we hear daily. Here’s why your mortgage rate might not be falling, even though the Bank of Canada is cutting:

• Fixed rates follow bond yields — not just the BoC.
• Inflation concerns remain high. Tariffs, trade tensions, and global uncertainty are keeping inflation expectations elevated.
• Yields often bottom before the last rate cut. This means the best fixed-rate deals might already be behind us for this cycle.

What Are Clients Doing Right Now?

Smart borrowers across Alberta are taking action instead of waiting — and their strategies reflect the new market reality.

• 5-year fixed terms are still the most popular. Over 80% of clients are choosing long-term stability, even if it means a slightly higher rate today.
• Short-term fixed rates are trending. One- and two-year fixed terms are gaining traction with buyers and renewers wanting flexibility.
• Clients are proactive with renewals. More homeowners are locking in rates well ahead of renewal to avoid surprises and rate hikes.
• Amortization extensions are being used strategically. With equity gains and strong repayment histories, borrowers are stretching back to 30 years to ease cash flow.

The pattern is clear: Albertans are structuring flexibility into their mortgage strategy — not waiting around hoping for perfect rates.

Alberta Case Study: Renewing in a Sticky Rate Market

Client: James from Grande Prairie
Scenario: Fixed-rate mortgage renewal in October 2025
Previous Rate: 1.89% (from 2020)
Remaining Balance: $325,000
Original Amortization: 20 years
Current Renewal Offer: 4.19% (5-year conventional fixed)

What We Did:

• Locked in a 3-year fixed at 4.09% with a 120-day rate hold, giving us time to track the market.
• Extended amortization to 30 years due to increased equity and strong repayment, lowering his monthly payment.
• Set up biweekly accelerated payments with a 15% prepayment privilege for added flexibility.
• Planned a Q3 2026 check-in to reassess for a longer-term fixed if rates drop further.

“I thought I’d ride out the drops, but I realized there’s no guarantee they’re coming. We built a plan that makes sense now and gives me room to pivot later.” – James, Grande Prairie

Takeaway: The longer we have your renewal on our radar, the more time we have to monitor rates and secure the best outcome for you.

Glossary of Key Terms

• Bank of Canada (BoC): Canada’s central bank, responsible for monetary policy.
• Overnight Rate: The interest rate the BoC sets for interbank lending, influencing prime and variable rates.
• Basis Point (bps): One hundredth of a percent. 100 bps = 1%.
• Bond Yield: The return on Canadian government bonds. Influences fixed mortgage rates.
• Rate Hold: A lender’s guarantee to hold an interest rate for up to 120 days.
• Amortization: The total time you have to pay off your mortgage, typically 25 or 30 years.
• Prepayment Privilege: Your ability to make additional payments toward your mortgage without penalty.
• Tariff-flation: Inflation caused by international trade tariffs and global price pressures.
• Starter-Smart Strategy: A short-term plan that balances lower rates and flexibility in uncertain rate environments.

FAQs About Rate Cuts and Renewals in 2025

• Will the Bank of Canada cut rates again this year?
  Possibly, but only one more cut is likely. The majority of forecasts point to rates holding steady.
• Why are fixed rates still high?
  Because they follow bond yields, which remain elevated due to inflation concerns and global risks.
• Should I wait to renew or buy?
  It’s risky. Most clients are holding a rate now and revisiting later. This strategy gives you protection and flexibility.
• What’s the best rate right now in Alberta?
  Insured 5-year fixed: 3.99%. Conventional 5-year fixed: 4.19%. Run your numbers with our mortgage calculators.
• When should I start planning my renewal?
  At least 4–6 months in advance. Early planning gives us more time to shop rates and structure the best plan.

Call to Action

Rates aren’t falling fast — and they may not fall much further. Let’s build a smart plan now. Give us a call or fill out an application and our team will get in touch to start building a plan that suits you.

Written by Renee Huse, licensed mortgage broker and founder of Spire Mortgage. Renee helps Albertans make confident real estate decisions with smart financing strategies tailored to their goals. Learn more about Renee here.