Kirkwood & Brennan Mortgage Group Ltd.

A friendly guide for Canadian homeowners who are about to renegotiate one of the biggest contracts of their lives.

Introduction - Why Everyone Is Talking About 2025 Renewals

If your mortgage is coming up for renewal between January and March 2025, you are not alone. Roughly one in three fixed rate mortgages in Canada will turn five years old during that window, thanks to the frantic home buying and refinancing wave of 2020 and 2021. Back then, rock bottom rates in the 1 percent range felt like a gift. Today, the rate landscape looks very different, but it is also improving more quickly than many expected even a year ago.

Early 2025 could be the sweet spot where policy maker caution, receding inflation, and hefty competition among lenders converge to give borrowers new negotiating power. Let's unpack the numbers, the forecasts, and-most importantly-what you can do right now to walk into your renewal meeting with confidence.

1. How We Got Here: A Capsule History of Rates 2020 - 2024

• Spring 2020: The Bank of Canada slashes its overnight target to 0.25 percent to fight a pandemic induced recession. Variable mortgages dip under 1.5 percent.
• 2021: Housing demand surges and five year Government of Canada bond yields remain below 1 percent. Lenders market five year fixed mortgages at record lows.
• 2022 through mid 2023: A global inflation spike forces the Bank of Canada into its fastest hiking cycle in 30 years, lifting the overnight rate to 5 percent. Five year fixed mortgages flirt with 6 percent.
• Late 2023 through 2024: Inflation cools. The Bank of Canada pivots to an easing cycle, trimming rates six times.
• By April 16 2025 the overnight rate sits at 2.75 percent, the lowest level since the hikes began.

2. Where We Stand Right Now - May 2025 Snapshot

• Bank of Canada overnight target: 2.75 percent. This sets the floor for variable mortgages and influences short term bond yields.
• Inflation (CPI, March 2025): 2.3 percent year over year, now inside the Bank's comfort band which eases pressure for further hikes.
• Five year Government of Canada bond yield: About 2.8 percent as of early May. This benchmark drives most five year fixed rate mortgages.
• Typical mortgage pricing: Uninsured five year fixed rates fall in the high 3 percent to low 4 percent range. Variable rates sit just above prime, currently near 4.95 percent.

3. The Five Forces That Will Drive Mortgage Rates Into Early 2025

• Bank of Canada policy path: Several major banks see another 50 to 75 basis points of cuts by July 2025 which would bring the overnight rate close to 2 percent. Variable and adjustable rate mortgages would fall and fixed rate discounts would widen.
• Inflation trajectory: Most forecasters expect CPI to drift toward 2 percent and stay there. A surprise uptick would stall or reverse rate cuts.
• Bond market expectations: Traders have largely priced in two Bank of Canada cuts by February 2025. If growth weakens, yields could fall another 30 to 40 basis points.
• Global central bank moves: Divergence from the United States Federal Reserve is pushing the loonie lower, but the Bank of Canada says it still has room to cut. A softer Canadian dollar can trim lenders' funding margins.
• Housing market momentum: CMHC expects sales to pick up as affordability improves, especially in the Prairies and Quebec, increasing competition among lenders for market share.

4. What the Big Banks and Analysts Are Predicting

• RBC Economics: Overnight rate at 2 percent by mid 2025 and five year bond yields averaging 2.5 percent.
• TD Economics: Five year bond yield flat around 2.75 percent to start 2025, drifting lower later in the year.
• BMO Capital Markets: Overnight rate down to 2.25 percent by Q3 2025 but warns the pace could slow if tariffs and fiscal uncertainty linger.
• CIBC Asset Management: Sees a 2.5 percent policy rate by year end 2025 with bond yields still attractive versus 15 year averages.

Consensus takeaway: Additional downside for mortgage rates is modest but real-think another 0.25 to 0.50 percentage points by early 2025 unless inflation flares up again.

5. Three Scenarios for Your Renewal Quote

• Base Case: Slow and steady cuts. Overnight rate 2.50 percent. Typical five year fixed 3.65 to 3.95 percent. Typical variable prime minus 0.75 percent. Probability about 55 percent.
• Rosy: Inflation melts and global growth cools. Overnight rate 2.25 percent. Five year fixed 3.25 to 3.55 percent. Variable prime minus 1.00 percent. Probability about 25 percent.
• Sticky: Inflation stalls above 2.5 percent. Overnight rate 2.75 percent. Five year fixed 3.90 to 4.25 percent. Variable prime minus 0.50 percent. Probability about 20 percent.

6. Renewal Playbook - Six Actions to Take Right Now

• Start the conversation 120 days out. Most lenders will hold today's lower rate for up to four months, giving you a free option if rates rise.
• Request multiple quotes. Big five banks, credit unions, and broker channel monolines price differently. A 0.20 percent spread on a 450 000 dollar balance saves about 900 dollars per year.
• Compare short term fixed terms. A three year fixed at 3.45 percent today could beat a five year at 3.95 percent if the overnight rate reaches 2 percent by 2026.
• Ask about a variable with an adjustable payment. If cash flow is tight, a static payment variable can smooth monthly costs while capturing future cuts.
• Check the fine print on penalty calculations. Some lenders use a hefty interest rate differential. Switching at renewal time avoids penalties entirely.
• Refresh your budget and credit. A strong credit score over 720 can unlock lender paid appraisal fees or rate buydowns worth hundreds.

7. Frequently Asked Questions

• Should I renew early in late 2025 instead? If your lender lets you renew six months early, watch bond yields. Lock early only if five year yields look poised to jump above 3 percent. Otherwise, the trend is still gently lower.
• Is it worth paying a fee to break now and refinance? Crunch the math. If you can drop your rate by more than 1 percent and you have at least three years left, the savings may eclipse the penalty, but in most cases waiting for natural renewal in 2025 is cheaper.
• What about converting my variable to fixed today? With the Bank of Canada actively cutting, converting right now often locks in a higher payment. Ask your broker to model both paths.
• Will the mortgage stress test get easier? OSFI still uses the greater of 5.25 percent or your contract rate plus 2 percent. As contract rates fall, qualifying gets easier automatically even if the formula does not change.

8. The Bottom Line - Your 2025 Renewal Could Be a Rare Window of Opportunity

Inflation is almost back in its cage, the Bank of Canada still has room to lower rates, and lenders are hungry for stable, low risk refinance business. That combination could bring five year fixed mortgages back into the low 3 percent range for well qualified borrowers in early 2025.

But markets can and do swerve. Hedge your bets by starting early, gathering competing offers, and leaning on an experienced mortgage broker who keeps one eye on bond screens and the other on your household balance sheet.

When you are ready to explore the options, reach out. I will comb the market for the sharpest renewal rate and translate every line of the fine print so you can focus on enjoying your home, not fretting about your mortgage.

Happy house holding, and here's to a smoother and cheaper 2025!

The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally. Instead, the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy. In the first scenario, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada's economy to fall into recession this year and inflation rises temporarily above 3% next year. Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented.

Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the United States, the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the euro area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China's economy was strong at the end of 2024 but more recent data shows it slowing modestly.

Financial markets have been roiled by serial tariff announcements, postponements and continued threats of escalation. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada's exchange rate has recently appreciated as a result of broad US dollar weakness.

In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation. 

Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January MPR. The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.

Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well controlled.

Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve. 

Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is June 4, 2025. The Bank will publish its next MPR on July 30, 2025.

Source: Bank of Canada Website

You might be surprised to learn how tariffs-taxes on imported goods-can affect your mortgage or home-buying plans. Tariffs can indirectly influence interest rates, which impacts mortgage payments and home affordability.

Here's a clear breakdown: When tariffs are imposed, imported goods become more expensive. Companies often pass these increased costs onto consumers, resulting in rising prices. Higher prices lead to higher inflation, and when inflation begins to rise, the Bank of Canada typically intervenes to control it, often by adjusting interest rates.

Why does the Bank of Canada raise interest rates when inflation spikes? Higher rates encourage people to save rather than spend, which slows down inflation. However, higher interest rates also mean your mortgage payments might increase, especially if you have a variable-rate mortgage.

As your local mortgage professional, our job is to keep an eye on economic changes like tariffs and interest rates so you don't have to. Whether you're looking to buy a new home, refinance your existing mortgage, or simply want to better understand how global events impact your finances, We are here to help.

If you're concerned about rising interest rates due to tariffs, we can explore options like fixed-rate mortgages, which provide stability by locking in today's rates for several years. If you're considering refinancing to improve your financial situation-whether that's managing your debt, lowering your monthly payments, or accessing equity from your home-understanding these economic factors can help us time your decision for maximum benefit.

In times of economic uncertainty, having a trusted mortgage broker by your side is invaluable. We are here to help you navigate these complexities, ensuring you feel informed and comfortable every step of the way. Our goal is to find solutions tailored specifically to your financial needs.

If you're interested in how tariffs and the broader economy might impact your mortgage or home-buying plans, please don't hesitate to reach out. Together, we'll find the right mortgage solution to keep your financial future stable, regardless of what happens in the global markets.

If retirement is approaching, you may be considering whether it's wise to pay off your mortgage early. As with many significant financial decisions, there isn't a one-size-fits-all answer. However, understanding the advantages and disadvantages can help you make an informed choice.

Pros of Paying Off Your Mortgage Early

• Financial Freedom and Peace of Mind
  Entering retirement without mortgage payments allows more monthly savings. Travel, hobbies, or spoiling your grandkids-all become easier when you're not worried about housing payments.
• Interest Savings
  By paying off your mortgage early, you significantly reduce the amount you pay in interest. That's thousands (potentially tens of thousands) of dollars saved that you can put toward your retirement goals.
• Reduced Financial Risk
  Owning your home outright provides stability. You won't have to worry about rising interest rates or market fluctuations affecting your mortgage affordability. This security is invaluable, especially during retirement when income is often fixed.

Cons of Paying Off Your Mortgage Early

• Lost Investment Opportunity
  When you put extra cash towards your mortgage, you miss out on investing that money elsewhere-like retirement accounts or other investment vehicles that might provide a higher return. Balancing mortgage payoff with investing is crucial, and that's where professional guidance can help.
• Reduced Liquidity
  Paying off your home early can reduce your cash availability, making it harder to access funds for unexpected expenses. Retaining a mortgage may offer you greater financial flexibility.
• Tax Considerations
  Although mortgage interest isn't tax-deductible in Canada (unless the loan is investment-related), having accessible cash to invest can sometimes provide better tax advantages than paying down a low-interest mortgage early. Everyone's tax situation is unique, so getting personalized advice is key.

So, What's the Best Decision for You?

Ultimately, the decision to pay off your mortgage before retirement depends significantly on your personal financial goals, current income, and retirement plans. As your mortgage broker, We are here to assist you in this process.

At every stage of your financial journey, I will help you assess your options, weigh the pros and cons, and make informed decisions that align with your retirement goals. If you're looking to explore refinancing options, effectively manage debt, or balance your mortgage payoff strategies with smart investing, let's discuss your unique situation.

Are you ready to talk about your mortgage and retirement strategy? We are here to help you every step of the way! Let's connect soon.

The Bank of Canada today reduced its target for the overnight rate to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

The Canadian economy entered 2025 in a solid position, with inflation close to the 2% target and robust GDP growth. However, heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada. The economic outlook continues to be subject to more-than-usual uncertainty because of the rapidly evolving policy landscape.

After a period of solid growth, the US economy looks to have slowed in recent months. US inflation remains slightly above target. Economic growth in the euro zone was modest in late 2024. China's economy has posted strong gains, supported by government policies. Equity prices have fallen and bond yields have eased on market expectations of weaker North American growth. Oil prices have been volatile and are trading below the assumptions in the Bank's January Monetary Policy Report (MPR). The Canadian dollar is broadly unchanged against the US dollar but weaker against other currencies.

Canada's economy grew by 2.6% in the fourth quarter of 2024 following upwardly revised growth of 2.2% in the third quarter. This growth path is stronger than was expected at the time of the January MPR. Past cuts to interest rates have boosted economic activity, particularly consumption and housing. However, economic growth in the first quarter of 2025 will likely slow as the intensifying trade conflict weighs on sentiment and activity. Recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments. The negative impact of slowing domestic demand has been partially offset by a surge in exports in advance of tariffs being imposed.

Employment growth strengthened in November through January and the unemployment rate declined to 6.6%. In February, job growth stalled. While past interest rate cuts have boosted demand for labour in recent months, there are warning signs that heightened trade tensions could disrupt the recovery in the jobs market. Meanwhile, wage growth has shown signs of moderation.

Inflation remains close to the 2% target. The temporary suspension of the GST/HST lowered some consumer prices, but January's CPI was slightly firmer than expected at 1.9%. Inflation is expected to increase to about 2½% in March with the end of the tax break. The Bank's preferred measures of core inflation remain above 2%, mainly because of the persistence of shelter price inflation. Short-term inflation expectations have risen in light of fears about the impact of tariffs on prices.

While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers' spending intentions and businesses' plans to hire and invest. Against this background, and with inflation close to the 2% target, Governing Council decided to reduce the policy rate by a further 25 basis points.

Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation. Governing Council will be carefully assessing the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. The Council will also be closely monitoring inflation expectations. The Bank is committed to maintaining price stability for Canadians.

Source: Bank of Canada Website

If your mortgage renewal date is approaching, it's important to take action. You might notice something that's hard to ignore: interest rates are significantly higher now than five years ago. You're not alone if you're concerned about what this means for your monthly payments. One practical solution worth considering is extending your mortgage amortization period. But what exactly does that mean, and could it be the right move for you? Let's break it down.

First, What is Amortization?

Simply put, amortization is the length of time it takes to pay off your mortgage in full. Most homeowners in Canada choose amortization periods between 15 to 30 years, sometimes longer. A shorter amortization means you'll pay off your home faster but with higher monthly payments. A longer amortization reduces your monthly payment amount but extends the total length of your loan.

Why Extend Your Amortization? The Pros and Cons

With higher interest rates today, extending your amortization period can provide immediate financial relief by significantly reducing your monthly payments. If budgeting comfortably each month is a challenge, lengthening the amortization might offer the breathing room you need.

• Lower Monthly Payments: Easier monthly budgeting.
• Financial Flexibility: Frees up cash flow for other important expenses.

• Increased Interest Costs: Over time, you'll likely pay more interest.
• Longer Debt Period: It takes longer to become mortgage-free.

It's a balancing act between short-term affordability and long-term financial goals, and every homeowner's situation is unique.

How Can You Extend Your Amortization at Renewal?

The good news is extending your amortization during your renewal period is usually straightforward. When renewing your mortgage, you'll have the opportunity to renegotiate your terms, including the amortization length. It usually requires little paperwork and can be managed smoothly, particularly with the assistance of a professional mortgage broker.

How I Can Help

As your reliable mortgage professionals, we aim to simplify the process and help you find the best option suited to your financial situation. We go over your current mortgage details, explore various scenarios, and clearly explain how changing your amortization and interest rate impacts your monthly payments and the total cost of your mortgage.

Together, we'll ensure your renewal is as stress-free and cost-effective as possible. Don't wait until you're feeling overwhelmed. Let's discuss your options now and find the mortgage renewal strategy that's right for you.

Contact us today, and let's take control of your financial future!