🏦 Bank of Canada July Decision Recap: What It Means for August Mortgages

Introduction

The Bank of Canada’s July 2025 rate decision kept its overnight rate unchanged, signaling a cautious approach to inflation and economic growth. For homeowners and mortgage shoppers, this decision has a major impact on borrowing costs heading into August 2025. Here’s what it means for fixed and variable mortgage rates — and how to plan your next move.

1. The July 2025 Rate Decision: No Change, But Optimism Grows

The Bank of Canada held its overnight rate at 2.75%, marking the third consecutive pause. While inflation is gradually easing, the central bank wants more consistent signs that price growth is sustainable before cutting rates.

• Inflation outlook: Core inflation has dropped closer to the 2% target but remains sticky in housing and energy sectors.

• Economic context: Slower job growth and weaker consumer spending hint at cooling conditions.

• Market response: Bond yields slightly declined after the announcement, showing that markets expect rate cuts later this year.

2. What This Means for August Mortgage Rates

🔄 Variable-Rate Mortgages

Since the Bank of Canada rate affects prime lending rates, variable mortgage holders won’t see immediate payment changes. However, with market sentiment shifting toward future cuts, lenders may start offering discounts on variable products to attract new borrowers.

📉 Fixed-Rate Mortgages

Fixed rates, driven by bond yields, could start easing modestly in August. As investors price in potential rate cuts, 3- and 5-year fixed mortgage rates may dip below recent highs — giving buyers a small window to lock in competitive terms.

3. What Homebuyers and Homeowners Should Do Now

✅ Consider shorter-term fixed rates. Two- or three-year terms can give flexibility if rates fall later in 2025.
✅ Get a rate hold. Lenders like RateShop can lock today’s best offers for up to 120 days.
✅ Review your renewal strategy. If your mortgage renews this year, negotiate early — lenders are becoming more competitive.
✅ Stay informed. The next Bank of Canada announcement could trigger more noticeable shifts in mortgage pricing.

4. Market Outlook for Fall 2025

Economists expect the first rate cut as early as October or December 2025, depending on inflation data. If confirmed, borrowers could see meaningful drops in both fixed and variable mortgage rates before year-end, offering relief to homeowners renewing at higher costs.

Conclusion

The July 2025 Bank of Canada hold gives Canadians a moment of stability — and hope for rate relief soon. Mortgage shoppers should stay proactive, comparing lenders and securing early approvals to capture lower rates as soon as they arrive.