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As a result of the tariffs kicking in on March 4, bond yields plunged to 2.5 per cent. Graham says a modest recovery that followed was due to the month-long tariff reprieve for Canada’s auto sector.

Plunging yields mean lenders have room to lower their fixed mortgage rates. Graham said the best insured five-year fixed rate in Canada is now 3.84 per cent – a low not seen since June 2022.

“This has narrowed the spread between the lowest fixed and variable rate to just 36 basis points, offering borrowers more rationale to lock in,” she added.

Now is a volatile time to shop for a home or a mortgage rate. Monthly national sales dropped in January.

“The safest course of action for mortgage borrowers, whether getting a new rate or coming up for renewal, is to get an application or rate hold in with a lender as soon as possible,” advised Graham. “This will help them hedge against rate volatility in the near future, while providing access to the lowest rates available to them today.”

How a Bank of Canada rate cut will change your mortgage payments:

Here’s a hypothetical scenario using Ratehub.ca’s mortgage payment calculator and the average home price in Canada in January 2025 — $621,753 — per the Canadian Real Estate Organization (CREA).

You’re a homeowner who put a 10 per cent downpayment on a $670,064 home with a five-year variable rate of 4.20 per cent amortized over 25 years (total mortgage amount of $621,753). You have a monthly mortgage payment of $3,338.

If the BoC announces that the key interest rate has dropped to 2.75 per cent, your variable mortgage rate will decrease to 3.95 per cent, and your monthly payment will drop to $3,254.

This means you’ll pay $84 less per month, or $1,008 less per year, on your mortgage payments.

This article was originally posted on March 6, 2025. It has since been updated.