Read the 2025 interest rate forecast.

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Key Takeaways

• Our current best 5-year fixed rate is 3.99% and 5-year variable rate is 4.25% (Prime -0.95%).
• For first-time home buyers, listings are increasing (especially for condos) in most major markets and should remain elevated for the next few quarters until more mortgage rate drops prompt sideline buyers to enter the market. It should remain favourable for buyers in the near future.
• For homeowners who are coming up for renewal, our Mortgage Renewal Calculator can help you plan ahead to get a sense of what rate you can expect from your lender at renewal, what your new payment would look like and how Perch can help.
• For homeowners who would like to be automatically notified when there’s a benefit to switching lenders and breaking their mortgage early, Perch automatically calculates the net benefit on a weekly basis for all your existing properties. Make sure to sign up for your free profile today.

Mortgage Rates Prediction

For the month of March, we anticipate fixed rates will stay flat and variable rates as well assuming the Bank of Canada holds on March 12th.

Canada’s bond yields (which influence fixed mortgage rates) have dropped in the last month (Source: Bank of Canada):

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Upcoming Bank of Canada rate announcement (March 12, 2025)

We look at some of the core factors that the Bank is monitoring to gauge which direction they are likely to go. In this case, all indicators seem to indicate they will hold.

• Real GDP Growth: The Bank of Canada is expecting GDP growth of 1.8% in 2025 and 2026. This is an acceptable amount of GDP growth and would support a hold. (Source: Bank of Canada)
• Inflation: Core inflation (year over year) in January was 2.1% (vs 1.8% in December), slightly above the Bank’s 2% inflation target and is trending upward, which would support a hold. (Source: Trading Economics)
• Unemployment: Decreased to 6.6% in January (0.9% higher than 1 year ago). This downward trend in the past few months would justify a hold. (Source: Trading Economics)

Buyer Mortgage Balances Prediction: Flat (condos) and up (non-condos)

We continue to believe that non-apartment/condo properties will experience slight upward price movements and apartment/condo prices in major markets will continue to face lower prices until excess inventory is absorbed (great article to read about this for Toronto here).

In addition to this, recent regulatory changes in December 2024 to increase the insured limit from $1M to $1.5M should compound this trend by further reducing demand for condos. Our CEO, Alex Leduc, was recently interviewed in this article on the topic.

Home Prices

As a general rule of thumb, a sales to new listings ratio (SLR) above 60 is deemed a seller’s market, below 30 a buyer’s market, and between the two a balanced market). In a seller’s market, prices are usually rising due to demand outstripping supply available, and in a buyer’s market prices are declining due to the supply of new listings being greater than the demand from buyers.

Canada took a steep turn in January, dropping roughly 10 points as shown by CREA below with an SLR of around 49. This reinforces that we ease closer to a buyer’s market across the country.

This is the national average and some cities have trended well below the average. For example, according to HouseSigma the Greater Toronto Area is a buyer’s market with an SLR of 22.

The SLR for condos is even worse (18) since there has been a flood of new inventory related to new projects hitting the market. Detached homes are not much higher at 23%.

According to CREA, the National Composite MLS Home Price Index (HPI) was flat month-over-month and year-over-year. Price increases in single-family homes are offsetting the decreases in apartments.