Did You Know?

Did you know that Canada's latest inflation figure has cooled to 1.7% according to Statistics Canada? For everyday Canadians, this is more than a headline. It can point to lower borrowing costs, steadier home prices, and fresh opportunities to either buy your first home or restructure an existing mortgage to save money.

Attention: Why Inflation Matters for Homebuyers and Homeowners

When people hear "inflation," they often think about grocery bills or the price of gas. Inflation also shapes mortgage rates. Here is the simple link:

• When inflation runs hot, the Bank of Canada raises interest rates to cool spending, and borrowing gets more expensive.
• When inflation cools, as it has now to 1.7 percent, mortgage rates tend to ease over time, which can improve affordability.

This shift signals an opening for Canadians who have been waiting. If you have been on the sidelines, the window to buy or to refinance may be wider than it has been in years.

Interest: How Lower Inflation Creates New Possibilities

With inflation below 2 percent, the Bank of Canada has more room to hold or trim rates in upcoming decisions. That matters because:

• First-time buyers: Lower rates can reduce monthly payments, help you qualify for more, or simply give you breathing room.
• Current homeowners: If your renewal is coming up, you may be able to lock in a lower rate than what was available last year.
• Upsizers and investors: Improved affordability can make it easier to move up or add a property.

Illustrative example: On a $450,000 mortgage, a 1 percent lower rate can trim payments by roughly $250 per month depending on amortization and term. Over five years, that can approach $15,000 in potential savings. This is a simplified example, and actual results depend on your exact mortgage details.

Desire: Why Acting Now Can Pay Off

Opportunities like this rarely last. In many markets, prices have stabilized. When rates drift lower, demand often picks up, which can nudge prices higher again. Getting organized now helps you stay ahead of the next wave of buyers.

This is where a dedicated mortgage team helps. We compare lenders, evaluate products, and build a clear strategy for your goals. That might mean a shorter term to keep flexibility, a fixed rate for payment certainty, or a refinance that consolidates higher interest debt. Small adjustments can lead to meaningful savings and less stress.

Clients often tell us they thought refinancing would be complicated or that they would not qualify for better terms. Once we review the numbers, we frequently uncover a path that reduces payments or shortens the time to become mortgage-free.

Action: Three Steps To Take Today

1. Review your current mortgage. If renewal is within the next 12 to 18 months, start now. Many lenders allow a rate hold well in advance.
2. Get pre-approved if buying. Locking in a rate protects you if rates tick up while you shop.
3. Speak with a trusted mortgage professional. Every situation is unique. A quick strategy session can confirm if you are leaving money on the table.

Stats Snapshot: Inflation, Rates, and Housing

• Inflation: Statistics Canada reports the July 2025 Consumer Price Index at 1.7% year over year.
• BoC perspective on renewals: The Bank of Canada notes that many households renewing in 2025 and 2026 will still see payment increases versus 2024 levels, although pressure eases as rates drift lower.
• Market activity: CREA reported July 2025 home sales up on a monthly basis with the national benchmark price holding steady.
• Example retail rates: Major bank special offers for 5-year fixed are posting in the high 4s, subject to borrower profile and conditions.

These data points suggest affordability conditions are improving while the overall stress on renewals varies by household. Verifying your specific numbers is the best next step.

Top 10 FAQs About Inflation and Mortgages in Canada

1) What does 1.7 percent inflation mean for my mortgage?

Lower inflation signals less upward pressure on interest rates. It can support stable or lower mortgage rates over time, which benefits new buyers and those exploring a refinance.

2) Will mortgage rates drop further if inflation stays low?

There is no guarantee. Historically, cooler inflation gives the Bank of Canada more flexibility to trim policy rates if broader data supports it. Market expectations will shift as fresh data arrives.

3) Should I choose a fixed or variable mortgage right now?

It depends on your tolerance for payment changes, your timeline, and your budget. Fixed provides certainty. Variable can benefit if rates decline. We model both options to show total interest, payment paths, and renewal scenarios.

4) Is now a good time to refinance?

If you are holding a rate that is materially above current offers, a refinance can reduce interest costs or consolidate higher interest debt. The math must include penalties, legal costs, and your timeline. We run the full comparison for you.

5) How does low inflation affect home prices?

Lower rates often increase buyer demand, which can add price pressure. If you find a home that fits your budget and needs, acting sooner can help you secure value before momentum builds.

6) I renewed last year at a higher rate, do I have options?

Possibly. If the projected savings outweigh penalties, a mid-term refinance might make sense. Lender policies vary. A quick review can confirm.

7) How does inflation tie into the mortgage stress test?

The stress test uses qualifying rates that move with market conditions. If rates ease, qualifying can become easier at the margin. Your income, debts, and amortization remain key factors.

8) Are first-time buyers benefiting the most?

Many first-time buyers gain from lower monthly payments and rate holds while they shop. Good preparation still matters, including down payment planning and a clear budget.

9) Should I wait for inflation to fall even further?

There is always a trade-off. Waiting for a slightly lower rate can mean competing with more buyers later. Locking in a rate hold gives you protection and time to shop.

10) How can a mortgage broker help right now?

We compare multiple lenders, negotiate terms, and tailor a structure that fits your goals. You get clarity, speed, and a plan that evolves with market data.

Closing Thoughts

Inflation at 1.7 percent is a welcome sign. For Canadians, it can mean fresh pathways to buy a home or to cut borrowing costs through a refinance. Conditions are improving, yet markets move quickly. A short conversation can confirm if now is the right moment for you to act with confidence.

Is the Mortgage Stress Test on the Way Out? How OSFI's New Loan-to-Income Rules Could Reshape Borrowing in 2025-26

Canadian borrowers have spent the past seven years living with the mortgage "stress test," a rule that forces buyers and refinancers to qualify at the greater of 5.25 percent or two percentage points above their contract rate. That buffer protected households when rates were cheap, but in today's higher-rate world it is under fresh scrutiny. In June, the Office of the Superintendent of Financial Institutions, OSFI, signalled it could replace that test with a loan-to-income, LTI, framework capped at 4.5 times a borrower's gross income. The change could land as early as 2026, and every Canadian with a mortgage decision on the horizon needs to understand the potential fallout.

1. From Interest-Rate Buffer to Income-Based Cap

Under the proposed rules lenders would monitor the share of new uninsured mortgages that exceed the 4.5× income cap, rather than forcing every applicant to clear a universal stress-test rate. The cap already applies at the portfolio level for federally regulated lenders beginning in fiscal 2025, giving OSFI real-world data before it makes a final decision on whether to scrap the stress test entirely.

OSFI says it will evaluate the framework until at least January 2026, then decide whether the LTI limit will stand alone or work alongside a scaled-back stress test. That timeline means borrowers shopping for pre-approvals in late 2025 could become the first to feel the impact.

2. A Perfect Storm of Renewals and Rate Plateau

The Bank of Canada held its overnight rate steady at 2.75 percent on July 30, 2025, its second consecutive hold. While stability offers short-term relief, a massive renewal wave means roughly 60 percent of all outstanding mortgages will reset between now and the end of 2026, most of them at higher rates.

The central bank's own modelling shows that about 60 percent of those renewing will still see payment increases, averaging 10 percent in 2025 and 6 percent in 2026 even if rates remain flat. In other words, qualification rules and payment affordability are converging issues for many households.

3. Who Stands to Benefit, and Who Could Be Squeezed?

• First-time buyers: High-income earners with modest down payments may qualify for larger mortgages under a pure LTI test because their household income, rather than the stress-test rate, becomes the ceiling.
• Move-up buyers in expensive markets: Households relying on two strong incomes could find that the 4.5× cap still limits purchasing power, especially in Greater Vancouver and the GTA, where median price-to-income ratios already exceed 10×.
• Renewers with growing salaries: If OSFI moves to LTI only, borrowers whose income has risen since 2020 could refinance into competitive rates without clearing an artificially high qualifying rate.
• Self-employed borrowers: Stated-income files could face extra scrutiny because actual taxable income, not gross revenue, will be the LTI denominator.

4. Stress Test vs. LTI: A Quick Scenario

Consider a couple earning a combined $150,000, seeking a five-year fixed mortgage at 4.69 percent with a 25-year amortization and 20 percent down.

• Current stress test: Must qualify at the greater of 5.25 percent or 6.69 percent. At 6.69 percent the maximum mortgage is roughly $560,000, translating to a purchase price near $700,000.
• Proposed LTI at 4.5×: Maximum mortgage is $675,000 (4.5 × $150,000), allowing a purchase price closer to $845,000 with the same down payment.

For borrowers on the cusp of qualifying, the difference can be the gap between condo and townhouse, or townhouse and detached home. Note, however, that lenders must keep their overall portfolio within OSFI's limits, so not every applicant will receive the higher ceiling.

5. Could Home Prices Rise or Fall?

Economists are split. Some argue that income-based caps in markets like the United Kingdom cooled demand and discouraged speculative bidding, implying price softness is possible. Others warn that if the LTI becomes the sole test and rates decline modestly, latent demand from sidelined buyers could spark renewed price pressure in mid-2026.

In the short term, expect a flurry of purchases before any transition date, as borrowers rush to lock in stress-test-based approvals. Similar surges occurred in 2016 before insured- versus uninsured-loan rule changes and again in 2018 when OSFI first introduced the stress test for conventional mortgages.

6. What You Should Do Between Now and 2026

• Run an income stress test today: Calculate your current LTI and debt-service ratios to see how close you already are to 4.5× income.
• Secure early rate holds: Lenders can typically lock a rate for 90–120 days. Doing so now protects you if rates slip lower but the stress-test rule remains.
• Consider a refinance check-up: If you renew in 2025-26, gather current pay stubs, T1s, and a property valuation so your broker can model both stress-test and LTI scenarios the moment rules change.
• Boost your credit buffers: Pay down credit cards and lines of credit. A lower total debt service ratio gives you more wiggle room under either framework.
• Stay informed: OSFI's next formal update is expected after its December 2025 meetings, with a possible implementation date in early 2026. Revisit your pre-approval strategy once new guidance is published.

7. Our Commitment to You

Navigating regulatory change is exactly where an experienced broker adds value. We monitor OSFI updates, Bank of Canada releases, and lender policy memos daily so you do not have to. When the rules shift, our team will re-underwrite your file under both regimes and advise on timing your application for maximum borrowing power, or maximum safety, depending on your goals.

Whether you are buying your first home, moving up, or facing renewal anxiety, reach out for a personalized assessment. We will map out best-case, base-case, and worst-case payment projections, factoring in potential LTI caps, future rate moves, and your household budget.

Bottom Line

The mortgage stress test is not gone yet, but Canada's shift toward an income-based framework is well under way. The window to optimize your borrowing strategy under the current rules is measured in months, not years. Proactive planning today can save thousands in interest tomorrow and put you in a stronger negotiating position when OSFI makes its final call in 2026.

Ready to see where you stand? Book a discovery call or apply online for a no-obligation pre-approval and stress-test check-up. Together, we will make sure policy changes work for you, not against you.

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%.

While some elements of US trade policy have started to become more concrete in recent weeks, trade negotiations are fluid, threats of new sectoral tariffs continue, and US trade actions remain unpredictable. Against this backdrop, the July Monetary Policy Report (MPR) does not present conventional base case projections for GDP growth and inflation in Canada and globally. Instead, it presents a current tariff scenario based on tariffs in place or agreed as of July 27, and two alternative scenarios-one with an escalation and another with a de-escalation of tariffs.

While US tariffs have created volatility in global trade, the global economy has been reasonably resilient. In the United States, the pace of growth moderated in the first half of 2025, but the labour market has remained solid. US CPI inflation ticked up in June with some evidence that tariffs are starting to be passed on to consumer prices. The euro area economy grew modestly in the first half of the year. In China, the decline in exports to the United States has been largely offset by an increase in exports to the rest of the world. Global oil prices are close to their levels in April despite some volatility. Global equity markets have risen, and corporate credit spreads have narrowed. Longer-term government bond yields have moved up. Canada's exchange rate has appreciated against a broadly weaker US dollar.

The current tariff scenario has global growth slowing modestly to around 2½% by the end of 2025 before returning to around 3% over 2026 and 2027.

In Canada, US tariffs are disrupting trade but overall, the economy is showing some resilience so far. After robust growth in the first quarter of 2025 due to a pull-forward in exports to get ahead of tariffs, GDP likely declined by about 1.5% in the second quarter. This contraction is mostly due to a sharp reversal in exports following the pull-forward, as well as lower US demand for Canadian goods due to tariffs. Growth in business and household spending is being restrained by uncertainty. Labour market conditions have weakened in sectors affected by trade, but employment has held up in other parts of the economy. The unemployment rate has moved up gradually since the beginning of the year to 6.9% in June and wage growth has continued to ease. A number of economic indicators suggest excess supply in the economy has increased since January.

In the current tariff scenario, after contracting in the second quarter, GDP growth picks up to about 1% in the second half of this year as exports stabilize and household spending increases gradually. In this scenario, economic slack persists in 2026 and diminishes as growth picks up to close to 2% in 2027. In the de-escalation scenario, economic growth rebounds faster, while in the escalation scenario, the economy contracts through the rest of this year.

CPI inflation was 1.9% in June, up slightly from the previous month. Excluding taxes, inflation rose to 2.5% in June, up from around 2% in the second half of last year. This largely reflects an increase in non-energy goods prices. High shelter price inflation remains the main contributor to overall inflation, but it continues to ease. Based on a range of indicators, underlying inflation is assessed to be around 2½%.

In the current tariff scenario, total inflation stays close to 2% over the scenario horizon as the upward and downward pressures on inflation roughly offset. There are risks around this inflation scenario. As the alternative scenarios illustrate, lower tariffs would reduce the direct upward pressure on inflation and higher tariffs would increase it. In addition, many businesses are reporting costs related to sourcing new suppliers and developing new markets. These costs could add upward pressure to consumer prices.

With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged. We 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 related to tariffs and the reconfiguration of trade. If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate.

Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US 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 from tariffs and trade disruptions are passed on to consumer prices; and how inflation expectations evolve. 

We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled.

Information note

The next scheduled date for announcing the overnight rate target is September 17, 2025.

Source: Bank of Canada Website

Mortgage Payments Are Easing Yet Renewal Stress Is Real

It feels like a collective exhale. After two grueling years of rapid interest‑rate hikes, the Bank of Canada has paused and even trimmed its policy rate, and many homeowners are finally seeing monthly mortgage payments drift lower. At first glance this sounds like unqualified good news. In reality, the picture is more complicated. Roughly six in ten Canadian mortgages will renew in 2025 or 2026, and for many borrowers, the new payment will still be higher than what they locked in during pandemic lows. In this explainer we unpack why payments are easing overall, what renewal stress looks like on the ground, and how to structure a game plan before your own mortgage comes due.

Did You Know?

• The average variable‑rate borrower with adjustable payments has seen monthly costs fall by roughly five to seven percent since the start of 2025.
• About two million mortgages, representing sixty percent of outstanding loan balances, will renew in the next eighteen months.
• Nationally, total mortgage payments declined by one point seven percent in the final two quarters of last year, the first back‑to‑back drop since 2020.
• The household debt‑service ratio steadied at fourteen point four percent in Q1 2025, down from the record fifteen point one percent seen in late 2023.
• Five‑year fixed terms signed in 2020 at around two percent are rolling over into rates in the four percent range, doubling the interest portion even after recent cuts.

Why Some Payments Are Finally Coming Down

Mortgage payments respond to two mechanical levers: interest rates and amortization schedules. The Bank of Canada began modest rate cuts in early 2025, and lenders quickly passed those savings to variable‑rate clients whose contracts adjust in real time. Fixed‑rate shoppers also benefit because bond yields have retreated on softer inflation. Meanwhile, homeowners who hit their trigger rate in 2023 were already making lump‑sum prepayments or stretching amortizations, so even small rate relief translates into meaningful monthly savings.

At the macro level, Statistics Canada reported that mortgage interest payments declined by zero point three percent in Q1 2025, the third decrease in four quarters. Combine this with steady income growth and the result is a debt‑service ratio that has eased off its peak. That said, the improvement is uneven. Borrowers on adjustable variable contracts are cheering, while those locked into fixed terms from the low‑rate era are bracing for impact.

The Renewal Crunch: Why 2025‑2026 Will Test Budgets

Renewal stress is not a catchy headline, it is a math problem. Imagine a homeowner who borrowed five hundred thousand dollars at one point eight percent in 2020. Their monthly payment was roughly two thousand one hundred dollars. If that mortgage renews at four point four percent, the new payment jumps to about two thousand seven hundred, an increase of roughly six hundred dollars a month. For households without spare cash flow, that delta can crowd out everything from grocery budgets to retirement contributions.

Regulators are watching closely. The latest Bank of Canada Financial Stability Report notes that sixty percent of mortgages renewing by late 2026 will face higher payments even under a soft‑landing rate scenario. Stress‑testing rules require lenders to qualify borrowers at the greater of two percent above contract or five point two five percent, but renewal affordability still depends on income growth, inflation, and employment stability.

Five Ways to Cushion Your Renewal

1. Start the conversation early. Six to eight months before maturity gives you time to compare options and lock a rate as protection.
2. Boost your prepayment. Even an extra hundred dollars a month today reduces the principal you carry into a higher‑rate environment.
3. Consider extending amortization cautiously. A longer schedule lowers the payment, then you can accelerate once rates normalize.
4. Consolidate high‑interest debt. Rolling credit‑card balances into a refinanced mortgage can free cash flow for the renewal bump.
5. Explore a blended rate. Some lenders allow you to combine your existing rate with current market rates, creating a mid‑point that softens sticker shock.

Top 10 Frequently Asked Questions

1. Why are national mortgage payments dropping if rates only dipped slightly?
Aggregate numbers blend variable loans, new originations, and fixed terms that have not yet renewed. The mix, plus income growth, is dragging the average lower.

2. Will everyone renewing in 2025 see a payment hike?
No. Borrowers who chose variable loans in 2023 at peak rates may see lower payments. Fixed‑rate borrowers from 2020‑2021 will likely pay more.

3. How big could my payment increase be?
Households rolling from two percent to four and a half percent could see monthly costs rise twenty to twenty five percent, depending on amortization.

4. Does my stress‑test rate guarantee I can afford the renewal?
It helps, but the test assumes stable income and no additional debt. Life changes can erode that buffer, so revisit your budget early.

5. Can I switch lenders at renewal with no penalty?
Yes, penalties disappear at maturity, though you may still pay appraisal and legal fees, which many lenders will cover to earn your business.

6. What if rates fall further before my renewal date?
You can often sign a rate‑hold with a broker or lender that lets you float down if market rates drop before closing.

7. Is it worth breaking early to lock a lower five‑year fixed now?
Run the math on penalties versus savings. In many cases, waiting until ninety days out avoids unnecessary costs.

8. How does an extended amortization affect long‑term interest?
It lowers payments today but adds interest over the life of the loan. Treat it as a temporary tool, not a permanent solution.

9. Should I choose variable or fixed this cycle?
Variable loans offer savings if rates keep drifting lower, but fixed provides certainty. A hybrid mortgage can split the difference.

10. Could widespread renewal stress trigger a housing downturn?
Analysts see limited systemic risk because job markets remain healthy, but localized price softness is possible if distressed sales rise in certain regions.

Key Canadian Mortgage Stats, Mid‑2025

• Bank of Canada policy rate: two point seventy five percent, unchanged since early June.
• Prime lending rate: four point ninety five percent at most major banks.
• Variable‑rate mortgages with adjustable payments: five to seven percent average payment drop year‑to‑date.
• Household debt‑service ratio: fourteen point four percent, down from the fifteen point one percent peak in Q4 2023.
• Mortgages up for renewal by end‑2026: approximately sixty percent of outstanding balances, or two million loans.
• Five‑year fixed rate today: around four point four percent for well‑qualified borrowers, versus pandemic lows near two percent.
• Mortgage delinquency rate: steady at zero point sixteen percent nationally, historically low but edging higher in oil‑producing provinces.
• Average mortgage size on new originations: four hundred fifty eight thousand dollars, up three percent from a year ago.

Your Next Steps

A gentle dip in payments should not lull anyone into complacency. If your renewal lands in the next two years, start planning today. Update your budget, gather documents, and speak with a mortgage professional who can model scenarios. Even a single proactive move such as a prepayment or a blended extension can soften the landing. Mortgage markets move quickly, but preparation lets you move faster.

Have more questions? Reach out and our team will walk you through a free renewal readiness checkup, complete with rate forecasts, amortization options, and cash‑flow strategies suited to your goals.

Scraping together a competitive down payment in 2025 often feels like a marathon. But two revamped federal programs-the First Home Savings Account (FHSA) and the beefed-up Home Buyers' Plan (HBP)-let first-time buyers tag-team their tax shelters, potentially unlocking six figures of cash without triggering a tax bill. Below, we break down the rules, the math, and the smart ways to combine them so you can hit the starting line of your home search with real momentum.

At-a-Glance: Key Limits & Timelines

• FHSA annual contribution room: $8,000; lifetime max: $40,000 (unused room carries forward).
• HBP withdrawal cap: $60,000 per buyer (up from $35,000).
• FHSA funds must be used within 15 years of opening the account; HBP withdrawals must be repaid to an RRSP over 15 years, starting the second calendar year after withdrawal.
• You can now use both programs for the same qualifying home purchase.

How the FHSA Works in 2025

Think of the FHSA as the love-child of an RRSP and a TFSA: contributions are tax-deductible now, and qualified withdrawals are tax-free later. You can deposit up to $8,000 per year until you hit the $40,000 lifetime ceiling, and any unused annual room rolls forward, so opening an account early maximizes flexibility (Source: CRA-First Home Savings Account, updated April 2025).

Contribution receipts lower your taxable income like an RRSP, and your growth compounds tax-free. You have a 15-year "participation period" to buy or build a qualifying first home. If you change your mind, you can roll the balance into an RRSP without affecting your RRSP contribution room, keeping the tax deferral intact.

The New $60k HBP: What Changed?

The 2024 federal budget boosted the RRSP withdrawal limit under the Home Buyers' Plan to $60,000, reflecting bigger down-payments in today's market (Source: Budget 2024, Chapter 1: More Affordable Homes). This change applies to withdrawals made on or after April 16, 2024 and extends to buyers with disabilities purchasing an accessible home.

You still need to repay the borrowed amount to your RRSP over 15 years or include any missed instalments in your taxable income. But the higher ceiling means a couple can now pull up to $120,000-and combine that with two FHSAs for a potential $200k+ down payment.

Double-Barrel Strategy: FHSA + HBP Together

Because Ottawa treats the FHSA and HBP as separate vehicles, you can tap both for the same purchase. A buyer who maxes their FHSA ($40k) and RRSP withdrawal ($60k) walks into their offer negotiations with $100,000-before even adding partner contributions or cash savings (Source: CRA-HBP Overview, updated January 2025).

That larger down payment can:

• Knock the home price below the 20 % mortgage-insurance threshold, saving thousands in CMHC premiums.
• Cut the mortgage balance, improving affordability stress-test ratios.
• Reduce long-term interest costs-especially valuable while BoC policy rates remain at 2.75 % (Source: Bank of Canada Rate Announcement, June 4 2025).

Timing Your Contributions & Withdrawals

• Open early: You unlock a fresh $8k FHSA room every January 1 after the account is opened, even if you contribute $0 the prior year.
• Front-load RRSPs: If cashflow is tight, contribute to your RRSP first, claim the tax refund, then re-invest the refund in the FHSA to double-dip on deductions.
• Coordinate closing date: FHSA withdrawals must occur before you take title; HBP withdrawals must be within 30 days of closing.
• Track repayment start: Missed HBP instalments are taxed, so set calendar reminders or automate contributions.

Why 2025 Buyers Are Leaning In

CMHC's 2025 Housing Market Outlook projects modest national price growth of 2–3 % through 2026, citing improved affordability as rates drift lower but inventory stays tight (Source: CMHC Housing Market Outlook, February 5 2025). Against that backdrop, first-timers with bigger liquid down payments will stand out to sellers and lenders alike.

Common Pitfalls to Avoid

• Overcontributing: FHSA overages incur a 1 % monthly penalty on the excess; use CRA MyAccount to check your room.
• Forgotten HBP instalments: Even $1 missed becomes taxable income for that year.
• Double-counting timelines: The 15-year FHSA clock and the 15-year HBP repayment schedule run independently-track them both.
• Market timing: Waiting for the "perfect" price can erase tax savings if rates rise again-balance patience with opportunity.

Top 5 Buyer Questions in 2025

1. Can I open an FHSA if I already own an investment property?

No. You must not have lived in a home you or your spouse owned in the current or previous four calendar years to qualify (Source: CRA FHSA eligibility).

2. Do FHSA contributions affect my RRSP room?

Good news-they don't. FHSA deposits sit on top of your RRSP and TFSA limits, giving you fresh tax-deductible space.

3. When do HBP repayments start under the new $60k limit?

The schedule hasn't changed: the second calendar year after the year you withdraw. If you take funds in 2025, repayments begin in 2027.

4. Can I combine an FHSA withdrawal, an HBP withdrawal, and a gift from parents?

Absolutely. Lenders will simply verify each source. A larger equity stake can even help you qualify under the mortgage stress test.

5. What happens if I don't buy within 15 years of opening my FHSA?

You must close the FHSA by the end of that year-rolling the balance into an RRSP or withdrawing it as taxable income. Rolling keeps the tax shelter intact.

Leveraging the FHSA and the enhanced HBP is one of the fastest ways to turn "someday" into "sold." If you're ready to map out a contribution strategy, or need help proving the down-payment source to a lender, our team is a click away.

Why the June Rate Hold Matters

On June 4 2025, the Bank of Canada (BoC) left its overnight rate unchanged at 2.75 % for the fourth meeting in a row (Source: Bank of Canada press release, June 4 2025). While the headline sounded uneventful, the ripple effects shape every mortgage conversation you'll have for the rest of the year, from first-time buyers wondering whether to go variable to renewal clients debating a three-year versus a five-year fix.

Variable-Rate Borrowers: Breathing Room but No Holiday

Because most Canadian variable-rate mortgages are priced "prime minus," a steady policy rate means prime (currently 4.95 %) stays put. Monthly payments on adjustable-payment variables remain the same, and static-payment variables avoid hitting a new trigger rate. Yet holding flat isn't the same as relief, amortizations are still stretched for thousands of borrowers who absorbed last year's hikes. If you're in that camp, use this pause to revisit a prepayment plan or consider converting to a shorter fixed term.

Fixed-Rate Outlook: Bond Yields Take Centre Stage

Five-year Government of Canada bond yields dipped below 3 % after the BoC announcement as traders priced in two potential cuts later this year. Lenders have already trimmed discounted five-year fixed rates by 10–15 bps since mid-May. The window could be brief: a stronger-than-expected GDP print or another bump in U.S. Treasury yields would push Canadian bonds higher, dragging fixed mortgage rates with them.

Stress-Test Implications

OSFI's mortgage stress test uses the greater of 5.25 % or the contract rate + 2 %. With deep-discounted five-year fixed deals now hovering around 4.54 %, many borrowers are still qualifying at 6.54 %, almost a full point lower than last autumn. That improved headroom can raise a household's maximum loan amount by roughly 7 %–8 %, making pre-approval timing a strategic lever for summer buyers.

Smart Moves for the Remainder of 2025

• Stagger terms: Blend a shorter three-year with a five-year to hedge both directions.
• Early renewal: Clients maturing in the next 12 months can lock today's fixed rates before fall volatility.
• Prepayment sweeps: Channel tax refunds and bonuses into principal while rates are stable.
• HELOC strategy: Combine a variable-rate HELOC for flexibility with a fixed-rate mortgage for certainty.
• Rate-float option: Some lenders now allow a one-time switch from fixed to variable without penalty, perfect if cuts arrive in Q4.

For brokers and agents, the advisory edge lies in scenario modelling: show clients how a single 25-bp BoC cut could shave $13–$15 off every $100,000 of variable balance, and contrast that with the cost of waiting if fixed rates bounce first. Tools like mortgage rate "trigger-point" alerts and automated renewal reminders keep you front-of-mind when the next policy move lands.

Bottom Line

A rate hold may sound like a non-event, but it's a strategic pause that savvy Canadians can leverage. Whether that means stress-test relief for new buyers or a stress-free renewal for existing homeowners, guidance from an informed mortgage professional makes all the difference.

Frequently Asked Questions

Q1. Does the June rate hold change the qualifying rate right away?
A1. Only indirectly. If your contract rate plus 2 % falls below 5.25 %, the stress-test floor stays 5.25 %. When discounted fixed rates drop enough, you'll qualify slightly easier.

Q2. Should I lock a fixed rate now or wait for possible cuts?
A2. If your closing is within 90 days, today's fixed rates look attractive versus early-2024 highs. You can also choose a lender that lets you "float down" if rates improve before funding.

Q3. Are HELOC rates frozen too?
A3. Yes. Most HELOCs are priced at prime plus a spread. With prime steady, your HELOC rate remains unchanged until the BoC moves again.

Q4. Could the Bank of Canada still cut rates later in 2025?
A4. According to BoC Governor Tiff Macklem, the Governing Council is "prepared to act" if unemployment softens and inflation trends toward 2 % (Macklem press conference, June 4 2025). Markets currently price a 60 % chance of a 25-bp cut by December.

Q5. How can a mortgage broker help me navigate this?
A5. Brokers compare dozens of lender promos daily, model rate scenarios, and negotiate rate-hold extensions, giving you clarity and potentially saving thousands over the life of your mortgage.