Interest rates are in the spotlight again, and both the Bank of Canada and the US Federal Reserve are signalling that we may be near the end of the 2025 rate-cut cycle. For Ottawa and Ontario homebuyers, this affects mortgage rates, affordability, and how you should plan your next move. Here’s a clear update on what’s happening—and how working with me, Joshua Tagg, can help you make confident decisions in a changing market.

Central Banks Are Slowing Down Rate Cuts

The Bank of Canada cut its policy rate on October 29, but it stressed that the current rate is likely appropriate unless new economic data shifts the outlook. Because of that message, markets are now pricing in less than a 10 percent chance of another rate cut at the December 10 announcement.

The US Federal Reserve is taking the same approach. Even though it also cut rates on October 29, the Fed is warning that more cuts are not a sure thing. A recent US government shutdown delayed important data releases, making the Fed more cautious than usual. “But Joshua, why do we care what the US is doing?” While the Fed doesn’t set Canadian interest rates, its decisions heavily influence our economy, our dollar, and ultimately the Bank of Canada’s path.

Both central banks are basically saying: it’s time to pause and wait for clearer signals.

What This Means for Mortgage Rates in Ontario

Government of Canada bond yields have moved up slightly. Because fixed mortgage rates follow bond yields, this small increase has kept fixed rates from dropping.

Variable-rate discounts haven’t changed. While another rate cut in 2025 looks unlikely, I still expect the Bank of Canada to trim its rate by at least 0.25 percent before the end of this cycle.

This month’s inflation reading matters more than usual. It’s the last full inflation report before the December 10 decision. The numbers were mixed but mostly encouraging. Headline inflation fell to 2.2 percent, and two of the Bank of Canada’s preferred core measures also moved lower. However, one core measure rose to 2.9 percent, which adds pressure for the Bank to hold rates steady.

Given the mixed signals, a rate hold in December is the most likely outcome.

Should You Choose a Fixed or Variable Rate?

Three- and five-year fixed rates are sitting close to their long-term average. If pricing stays similar, the five-year fixed still provides the best balance of stability and value for most borrowers.

Variable rates could turn out to be the cheapest option over the full term, but only if you’re comfortable with short-term changes. Variables move with the Bank of Canada, so your monthly payment could rise or fall.

If you’re unsure which option fits your situation, I can compare both scenarios for you. Just reach out and I’ll run the numbers.

What Canada’s Big Banks Expect Next

Canada’s major banks don’t agree on what comes next:

• Scotiabank believes rate cuts are finished and predicts two hikes in late 2026
• TD, RBC, and CIBC expect rates to hold at 2.25 percent through 2026
• BMO and National Bank still expect one more 0.25 percent cut

This wide range of opinions shows just how uncertain the outlook is. That’s why having an experienced mortgage broker in your corner is so important right now.

Why Ottawa and Ontario Buyers Should Work With a Mortgage Broker Today

Markets are shifting, inflation is still evolving, and expert forecasts are all over the map. Getting clear, unbiased advice can save you thousands and help you avoid costly mistakes.

As your Ottawa/Ontario mortgage broker, I can help you:

• Track rate changes and lender specials
• Compare fixed and variable options for your situation
• Lock in a competitive rate before markets move
• Understand your budget and approval limits
• Reduce stress and navigate the homebuying process smoothly

If you’re planning to buy in 2025 or 2026—or if your mortgage renewal is coming up—now is the right time to talk strategy. Send me a message and let’s get started.