Will your mortgage get cheaper? Bank of Canada may cut interest rates soon

As inflation cools and borrowing costs remain high, many Canadians are asking: Will the Bank of Canada finally lower interest rates? After two years of rising interest rates to control inflation, many households feel the pressure.


Mortgage payments have surged, loans have become costlier, and small businesses are also facing credit strain. With inflation now closer to the Bank of Canada’s target, hopes for a rate cut are a tangible goal.


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What’s happening?

The Bank of Canada’s next interest rate announcement is scheduled for June 5, 2025. According to market watchers and economists, there is a strong chance the Bank will cut its key interest rate by 0.25%, bringing it down from the current 5%.

Several economists, including those from Desjardins and Capital Economics, believe the Bank has enough evidence to act. Inflation has slowed, wage growth has moderated, and economic activity is weaker than expected. These are key signs the Central Bank looks at when deciding rate policy.

How will it affect you?

If Canada’s Central Bank cuts rates, it could mean:

• Lower mortgage payments for those renewing or on variable rates
  
  
  
• Easier access to credit for individuals and small businesses
  
  
  
• Much-needed relief for debt-laden households
  
  
  

A rate cut could also make borrowing more affordable for first-time homebuyers or people considering major loans. However, financial advisors warn that rate cuts may be gradual, so big changes might not happen right away.

What are the experts saying?

Desjardins economists say the economy is showing “clear signs of slowing,” especially in consumer spending and housing. They believe the Bank of Canada could lead the way with an early rate cut, possibly ahead of the US Federal Reserve.

Capital Economics agrees, stating that the Bank could make three rate cuts by the end of 2025. The first could come in June, followed by others in the second half of the year.

Meanwhile, economists at the Royal Bank of Canada are more cautious. They say a June cut is possible, but the Bank may wait until July to get more inflation and wage growth data.


Also Read: Credit cards are feeding young Canadians more than actual food; As wages stagnate and rent soars, debt becomes the only thing they can afford


Any change in interest rates affects everything from credit card rates to investment returns and housing prices. That’s why every day Canadians, not just economists, watch the Bank of Canada’s decisions closely.

Just days before the June 5 announcement, all eyes are on the central bank. If a rate cut comes, it may mark the start of a new phase aimed at helping Canadians breathe easier financially.