It’s not just the buyers, it’s people that are having to renew and people with variable rates. Here are the three reasons why we are seeing mortgage rates drop:
1. Bank of Canada cutting rates.
This month the Bank of Canada lowered it’s key interest rate by 25 basis points to 2.75%. The next rate announcement will be on April 16th, where we will most likely see it cut by another 25 basis points.
2. Bond market going down.
Government bond yields have sharply lowered from their highs earlier this year. Due to economic uncertainty from the tariffs, which I don’t want to get into just yet, the lower bond rates specifically effect the 5 year fixed rate. As the bond rates lower so will the fixed rate. Lenders use bond yields as a benchmark to determine their mortgage rates.
3. Bank competition.
The banks are becoming more competitive with each other over mortgage rates, especially with larger ones. We’re starting to see uninsured fixed rates dropping aggressively and this is due to the decline in bond yields and fighting for market share. It was frustrating to see the Bank of Canada reducing and reducing rates and not seeing it reflected in what the banks were offering. Well, the tide has turned and we are going to be seeing rates drop significantly due to competition. The banks are also more aggressive this time of year as they just had an infusion of RSP contributions.
I hate to talk about tariffs again, but the uncertainty they are creating in the economy is going to help the real estate market in creating affordability for buyers, relief for current owners, and boost construction as builders will start up again and we will see some much needed supply hit the market. We were already expecting interest rates to decrease, but we weren’t expecting tariffs. The tariffs have only turbocharged the rate cuts lower than expected, which overall will be great for real estate.
Here are the current rates as of today, which will be lower by next week.
Insured Mortgage
An insured mortgage, also known as a high-ratio mortgage, is a type of mortgage that requires mortgage default insurance when the down payment is less than 20% of the home’s purchase price. This insurance protects the lender in case of default.
3 year = 3.89%
5 year = 3.83%
Variable = 3.9%
Conventional Mortgage
A conventional mortgage, also known as an uninsured mortgage, is a loan for no more than 80% of the property’s purchase price or appraised value, requiring a minimum down payment of 20% and typically avoiding the need for mortgage default insurance.
3 year = 4.09%
5 year = 4.04%
Variable = 4.25%
May 12, 2026 
