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Welcome to the Better Mortgage Select monthly newsletter – May 2025 edition. Brought to you by Daniel Patton, Michael Zanzini, Lorenzo Podda, and our President, Dave Butler.
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As we approach the midway point of 2025, it's becoming increasingly clear just how fast things can change in Canada’s mortgage and economic landscape.
The latest unemployment data - released earlier this month - showed an uptick in Canada’s jobless rate. While the rise isn’t astronomical in historical terms, it’s certainly meaningful in today’s rate-sensitive climate. Typically, rising unemployment would open the door for a Bank of Canada rate cut, but this month’s story took an unexpected turn.
Why? Because core inflation - the measure the Bank of Canada watches most closely - has moved up above 3%, even as headline inflation has now dropped to 1.7%, below the BOC’s 2% target.
That disconnect - lower headline inflation but sticky and rising core inflation - is exactly what the Bank of Canada fears most. And the bond market’s reaction has been telling.
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Bond Yields Spike: Fixed Interest Rates Have Bottomed for the Moment
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The bond market was quick to show its feelings on the recent inflation report, spiking last week to the highest levels since January. As of today, Canadian bond yields (which are tied to fixed mortgage rate pricing) are up 50 bps (0.50%) from their lows in early April.
This surge in bond yields has already translated into small but meaningful increases in fixed mortgage rates. We’re now, for the moment, out of the sub-4% era for 5-year fixed conventional rates, and even insured mortgage rates that were routinely offered at 3.99% just weeks ago have become rare.
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What’s Holding Yields/Rates Up? (Spoiler: It’s Not Just Canada)
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Another important factor behind rising bond yields is the influence of the U.S. economy. The recent passage of what many are calling Trump’s “Big, Beautiful Bill” has market watchers anticipating rising bond yields in the U.S., driven by increased government spending and higher expected deficits. As U.S. yields climb, Canadian bond yields often follow, regardless of what’s happening domestically.
This “drag effect” could prevent our bond yields - and by extension, our mortgage rates - from falling, even if our own economic data suggests they should.
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Eyes on GDP: What Does All this Mean for You?
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Canada’s Q1 GDP report is set to be released tomorrow. The data could have a real impact on next Wednesday’s Bank of Canada rate decision, though we likely won’t see the full effect until July.
What all this means for you, is that we’re no longer in the lowest-rate period of the year, and market volatility has perked up. Here’s our current advice:
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1. If you're shopping for a home: Get a 120-day fixed rate hold. It locks in today's lower rates and protects you from future increases. If rates fall, you can still adjust. 2. If you're in a variable rate: Stay vigilant. We’ll be watching the fixed rate market closely to help guide you on if, and when, to lock in. 3. If your renewal is coming up soon: Get in touch now. Many banks lag in their rate adjustments, which means opportunity exists - especially if your broker can shop your file against newer market offers.
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Stay Tuned: Bank of Canada Rate Decision next Wednesday
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Our view? It’s a delicate balance right now. The Bank of Canada likely wants to cut rates to support a slowing economy, but climbing core inflation - and external pressure from U.S. bond markets - may force them to hold steady for now. With that, our bet is that the Bank of Canada will HOLD interest rates. If we get lucky and see them drop rates by 0.25%, the bond market is likely to react with lower yields, and this could create a small window of opportunity for fixed rate mortgage seekers. We'll be sending out our Breaking News Email immediately following the Bank of Canada’s announcement next Wednesday morning. Be sure to check your inbox right around 9:45am.
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And as always, if you want personalized advice, don’t hesitate to reach out to us. We’ve guided thousands through the past three roller-coaster years, and we’re ready to help you navigate what’s ahead – info@bmselect.ca.
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We have officially crossed the $1,000,000 mark in terms of ACTUAL MONEY saved for our clients. Since our March 6th Rate Comparison email (watch here), we’ve helped 137 clients break out of their high-interest 3-year terms and secure lower-rate 5-year fixed or variable options.
- Average amount saved per client: $8,592
- Total combined savings for our clients: $1,177,104.94
- This includes prepayment penalties to the existing lender - There are no gimmicks, no tricks, just pure savings.
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Check out the math for yourself:
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If you signed a 3-year fixed-rate mortgage in 2023 or early 2024, email us at info@bmselect.ca to see how much we may be able to save you.
*As a bonus to all this money being saved, the client who’s mortgage approval pushes our ‘Savings Counter’ over the $2,000,000 mark, will also receive a $500 Amazon Gift Certificate!!!*
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2025 Mid -Year Review: Wednesday, June 11 at 6:30 PM EST Thank you to everyone who attended our last webinar! We appreciate the huge turnout and the kind feedback.
Congratulations to Matthew Fromm, winner of the last giveaway's $150 Amazon gift card!
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Our next live webinar takes place in just under two weeks, on June 11th - which will give us a full week to digest and delve into the Bank of Canada’s Interest Rate announcement and what it is all going to mean for the 2nd half of the year. Join us for expert insights into real estate and mortgage trends, and actionable strategies for the remainder of 2025.
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This month, Daniel and Lorenzo attended a market outlook presentation by BMO Chief Economist, Douglas Porter, gaining timely insights on inflation, interest rates, tariffs, and the Canadian economy. Learning directly from a top economist helps us stay ahead of market shifts and deliver the most informed guidance to our clients.
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Michael Zanzini kicked off the month with a visit to Our Neighbourhood Realty, delivering a timely market update and answering key questions to help the team navigate the fast-evolving summer lending landscape.
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Michael wrapped up the month at TRREB’s Realtor Quest 2025 at the Toronto Congress Centre, reconnecting with the Our Neighbourhood Realty team and networking with real estate pros over two impactful days. The highlight? An inspiring keynote and performance by music icon Pitbull, leaving the crowd energized. The BM Select team is already excited for next year!
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Just a friendly reminder to come visit us on our socials, where we put out a ton of videos with tips and information to help you navigate the wild world of mortgages! Check out the links below and give us a follow! | |
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As always, if you have any questions or want to do some mortgage planning, feel free to reach out to us at: info@bmselect.ca | |
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