Well, they did it. Or more accurately, they didn’t do much of anything.

The latest Bank of Canada rate decision was released on Wednesday, April 29th that they are holding the overnight policy rate steady at 2.25%. The announcement was more of a snorefest, if anything, but that’s exactly what was expected. Tiff Macklem and the crew at the BoC decided to play it safe, opting for a “wait and see” approach that has become the hallmark of our current economic climate.

I get it… stability isn’t always the most exciting headline… but I’ll take that over a hike any day of the week.

So, why did they hold and what does this mean for mortgage rates moving forward? Let’s break down the “why” behind Wednesday’s decision. 

The Global Tug-of-War and the Bank of Canada Rate Decision 

It’s easy to think that what happens at the Bank of Canada is only about what’s happening on Bay Street or in our local housing market. But we also have to look at the world stage. Right now, the BoC is staring down a lot of global uncertainty.

Between the ongoing conflicts in the Middle East and some pretty aggressive shifts in international trade policy, the world is a bit of a powder keg. In other words, we’re facing extreme volatility. When global tensions rise, energy prices usually follow suit… and the continual closure / opening / closure sequence we’ve seen with the Strait of Hormuz isn’t helping. We saw exactly that in March, with a slight bump in inflation hitting 2.4%, according to Statistics Canada’s April 20th report.

While 2.4% isn’t exactly “hair-on-fire” territory, it’s still a notable jump from the 1.8% we saw in February. The BoC wants to make sure that the energy-driven spike doesn’t turn into a broader trend which could push them to hike their rate ahead of expectations. 

Upward Pressure Back on Fixed Mortgage Rates?

In last week’s blog, bond yield had fallen off their peak. I mentioned that if the ceasefire held, then yields could continue to fall, which would then push fixed mortgage rates down. While the ceasefire is at least somewhat holding… tensions remain elevated, and it doesn’t look like we’ll see an end to this conflict anytime soon. 

It seems the bond market is getting a bit frustrated with all the flip flopping and yields have been increasing over the past week. Today, Wednesday April 29th, bond yields are up by over 3%, climbing above their recent peak on March 19th. The 5 year yield is now at it’s highest point since June 2024. At that time, fixed mortgage rates were in the high 4% to low 5% range. As of today, the lowest 3 year fixed rates range from 3.99% to 4.09% with the lowest 5 year rates being in the 4.04% to 4.24% range. If yields continue to rise, then we’ll certainly see fixed rates increase. 

Trends can always change, as we’ve seen over the past week. This is why you shouldn’t be waiting to lock in a rate. If yields continue to rise, fixed rates will follow. That’s the scope of the market this week… will we see something different next week? Time will tell of course. 

Whether you’re looking for a mortgage renewal or exploring refinance and debt consolidation to clear up some high-interest credit card debt, I would suggest locking in a rate. If it drops, we can always get your rate lowered for you. But if rates rise while you run down the clock, then you would have no choice but to accept the higher rate. By acting now, you’re protected against any potential rate increases. 

Final Thoughts

Today’s Bank of Canada decision to hold the policy rate at 2.25% was in line with expectations. The rate is expected to remain stable until at least later this year, when some economists are forecasting a hike… with more expected in 2027. Global uncertainty and energy-driven inflation is making it tough for anyone hoping for rates to come down. If bond yields continue to rise, then we can expect fixed rates to move with them. But anything can happen and no one has a crystal ball. Not the Bank of Canada, not the big banks, not economists, and certainly not myself. Time will tell.Â