Is the Rate Floor Here? What RBC’s Forecast Means for Your Mortgage Strategy
Is the Rate Floor Here? What RBC’s Forecast Means for Your Mortgage Strategy
Date Posted: October 22, 2025
After nearly a year of gradual rate cuts, Canadian homeowners are starting to ask a big question: have we finally hit the floor?
RBC’s most recent forecast (October 2025) suggests the Bank of Canada may now be near the end of its easing cycle, meaning that rates could plateau — and even rise again slightly — if inflation doesn’t continue cooling as planned. That message has big implications for anyone about to renew, refinance, or buy a home.
📉 The State of the Market: Signs of a Turning Point
The Bank of Canada’s overnight rate currently sits at 2.50%, down from 5.5% just a year ago — a significant shift that’s eased pressure on variable-rate borrowers and slowly revived housing demand across much of Ontario. But inflation remains sticky.
Core inflation — which strips out volatile components like energy — has hovered around 2.5%, slightly above the BoC’s 2% target. Wage growth remains strong, and consumer spending, while softer, hasn’t fallen off a cliff.
This balancing act is what’s driving economists like RBC’s to say: the major cuts might be behind us. The central bank needs to avoid reigniting demand-driven inflation, especially in housing — a sector highly sensitive to rate changes.
🏦 What “Rate Floor” Means for Borrowers
A “rate floor” isn’t an official threshold — it’s the idea that borrowing costs have reached their lowest sustainable point for the foreseeable future.
If that’s true, we may be entering a stabilization period, not another deep-cut phase. That means:
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Variable-rate borrowers might have already seen the bulk of their savings, with future cuts expected to be small and spaced out.
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Fixed-rate borrowers could actually face mild increases in lender pricing, as funding costs rise despite the policy rate holding steady.
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Investors should be aware that discounting by lenders is fading — the cheapest fixed rates seen in early summer 2025 are no longer widely available.
💡 How to Adjust Your Mortgage Strategy
If you’re renewing or planning a purchase, consider the following moves based on today’s landscape:
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For renewals:
Don’t wait until your maturity date. Many lenders allow you to renew up to 120–180 days early, locking in a rate before potential increases. A broker can compare dozens of lenders to ensure you’re not accepting a “default” offer that’s 0.2–0.4% higher than necessary. -
For new buyers:
Secure a rate hold now. It protects you if fixed rates rise again in the coming weeks. And if rates fall, you’ll still get the lower one before closing. -
For investors:
Shorter terms (1–3 years) can preserve flexibility if rates shift again. And for portfolio growth, consider alternative lenders or MICs like Advanced MIC for fast approvals and competitive pricing in the private space. -
For anyone debating variable vs. fixed:
Remember: a variable only wins when the Bank of Canada cuts significantly and quickly. If we’re already at the floor, the potential savings may be limited — and stability could win out.
🧭 The Big Picture
In 2022 and 2023, the narrative was “rates can only go up.” In 2025, it’s flipped — “how low can they go?” The truth is that neither extreme lasts forever.
A stable-rate environment can actually be good for borrowers. It creates predictability, allows for better budgeting, and makes mortgage planning more strategic than reactive.
🤝 Final Thought
If RBC is right and this truly is the rate floor, the next few months could be the sweet spot for locking in a mortgage that balances stability and flexibility.
Whether you’re renewing, buying, or refinancing, a broker can help you evaluate every lender — not just the one your bank offers — to ensure you capture the best structure for your needs before the market shifts again.
Mortgage Brokers Ottawa has access to over 30 lenders and 100+ agents who can help tailor your mortgage strategy — and it’s typically free to use our services. Reach out today to explore your options while rates remain near their lowest point in years.