The Calm Before the Cuts? What Experts Expect from the Bank of Canada This Winter

 

After one of the most unpredictable rate cycles in recent memory, Canadians are finally catching their breath.

But if there’s one thing history teaches us, it’s that calm rarely lasts for long in the mortgage market.

With economists divided over whether another cut is coming this winter, borrowers are left wondering: should I act now, or wait to see what happens next?

 

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📊 A Year of Transition

 

2025 has been a transitional year for Canada’s economy — one that’s tested homeowners, investors, and policymakers alike.

• Inflation has cooled from nearly 3% at the start of the year to around 2.5%, but progress has stalled in recent months.

• Wage growth remains resilient, and the housing sector — though calmer — has shown early signs of renewed life as lower rates bring buyers back.

Against that backdrop, the central bank’s messaging has shifted. It’s no longer promising an aggressive cutting cycle — it’s signaling caution.

That’s why RBC, CIBC, and TD all predict slightly different outcomes for the winter:

• RBC Economics expects one final 25-basis-point cut by January 2026 before the Bank pauses for the rest of the year.

• CIBC believes rates could hold steady through spring as inflation proves sticky.

• TD Bank sees a gradual easing path — but warns that slower growth could drag longer than expected.

 

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🧭 What This Means for Borrowers

 

Regardless of which forecast you believe, one thing is certain: this winter is shaping up to be a pivotal window for mortgage strategy.

Here’s what different groups of borrowers should keep in mind:

1. For those up for renewal

Roughly 60% of Canadian mortgages are set to renew by the end of 2026 — and this winter’s borrowers are right in the middle of that wave.

While rates are significantly lower than their 2023 peaks, they’re unlikely to return to pre-pandemic levels anytime soon. That means renewal offers this winter could be your best chance to lock in before volatility returns.

Even if another small cut comes early in 2026, the impact on fixed rates could be offset by rising bond yields or funding costs — both of which have been trending higher in recent months.

2. For buyers waiting for the “perfect” moment

If you’re hoping that a winter rate cut will make buying drastically easier, temper expectations.

A 0.25% reduction in the policy rate only changes monthly payments by about $65–$75 per $500,000 borrowed — barely enough to offset even a 1–2% home price increase once demand rebounds.

That’s why many brokers are advising serious buyers to act during this calmer fall-winter window, before renewed market competition drives prices higher in the spring.

3. For variable-rate borrowers

Variable mortgage holders have already enjoyed months of relief from previous rate cuts. If another reduction comes, expect modest savings — but also recognize that we’re likely near the end of the cutting cycle.

If you’ve been riding a variable rate for flexibility, now’s the time to review whether switching to a short-term fixed option might better protect your budget heading into 2026.

 

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💡 The Bigger Picture: A Market at a Crossroads

 

The Bank of Canada’s decisions over the next few months will be about balance, not bold moves. Officials want to avoid tightening credit too soon — but they also can’t risk cutting too quickly and reigniting inflation or housing speculation.

It’s a delicate act that leaves homeowners in an in-between space:

• Fixed mortgage rates have stopped falling and, in some cases, are creeping back up as lenders price in higher long-term bond yields.

• Variable-rate discounts are shrinking, as lenders tighten margins in response to rising funding costs.

• Borrower sentiment remains cautious, with many Canadians focusing on renewal planning and debt consolidation instead of new purchases.

In other words: the calm is real — but it may not last.

 

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🛠️ How to Use This Period Wisely

 

This quieter market is a chance to get ahead, not sit back. Here’s how:

1. Renew early — Most lenders allow early renewals up to 180 days before maturity. Locking in now could save you from potential lender repricing if volatility returns.

2. Secure a rate hold — If you’re thinking of buying, a 120-day rate hold gives you protection from rate hikes and flexibility to capture cuts if they occur.

3. Review your mortgage structure — A broker can help you compare fixed vs. variable, open vs. closed, and short vs. long-term options to ensure you’re aligned with your goals — not just current headlines.

4. Consolidate or refinance — If you’re carrying higher-interest debt, today’s lower mortgage rates can help reduce your monthly burden and improve cash flow.

 

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📅 What to Expect Next

 

If the BoC follows through with one more cut this winter, expect lenders to respond quickly — but unevenly.
Major banks typically adjust variable rates within days, while fixed rates move more cautiously based on bond market trends.

Either way, the first quarter of 2026 could bring renewed activity in housing as buyers who’ve been waiting on the sidelines start returning.

That makes now — before that momentum builds — the ideal time to reassess your mortgage position and secure stability for the year ahead.

 

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🤝 Final Thought

 

The calm we’re in today is temporary. Whether rates move down again or hold steady, this winter represents a crucial planning window for Canadian homeowners.

If you’ve been waiting for clarity before making your next mortgage move, this is it.
The data is in, forecasts are converging, and the path forward is visible — it’s just a matter of how you navigate it.

Mortgage Brokers Ottawa can help you make sense of the noise, compare options across 30+ lenders, and position yourself for whatever the Bank of Canada does next.

In times of calm, preparation creates opportunity — and this winter may be the calm before the next shift.