Are Variable Mortgage Rates Worth It in 2025?

In 2025, Choosing the Right Mortgage Isn’t Just About the Rate—It’s About Strategy

Fixed or variable? It’s the classic mortgage question—and in 2025, it’s more relevant than ever. With inflation cooling, talk of rate cuts heating up, and uncertainty still clouding the economic outlook, borrowers are stuck in a uniquely tough spot.

And while today’s variable rates look poised to fall further, that doesn’t make them a guaranteed win.

Rates May Drop—But They Haven’t Yet

Right now, the Bank of Canada’s overnight rate sits at 2.75%, and the prime rate—what lenders use to set variable-rate mortgages—is holding at 4.95%.

Markets expect cuts later this year. If those cuts happen, here's what variable and fixed rates could look like by the end of 2025:

These figures are for insured mortgages with minimum down payments on owner-occupied homes. Actual rates vary by lender and are subject to change.

As WOWA notes in their April 2025 forecast:

“The Bank of Canada is expected to begin cutting rates in mid-2025 as inflation approaches its 2% target.”
(Source: WOWA.ca)

But don’t mistake “expected” for guaranteed. As we’ve seen before, things change quickly—and rate forecasts are often wrong.

Remember 2020? The Experts Were Wrong Then Too

When COVID hit, economists predicted a housing crash. Instead, we saw a real estate frenzy. Interest rates plunged, demand exploded, and those who took variable rates often saved thousands.

Fast forward to 2025: inflation has slowed, but global conflict, political change, and economic fragility still loom large. A recession remains possible. So does another price rebound.

As Canadian Mortgage Trends recently reported:

“Rate cuts are priced in, but Bank of Canada officials continue to stress that decisions will be driven by data—not market pressure or political timing.”
(Source: CanadianMortgageTrends.com)

That means even with pressure to lower rates, we could still see hesitation or reversals if inflation sticks or the global economy shifts.

 Source: wowa.ca

So—Should You Go Fixed or Variable in 2025?

There’s no one-size-fits-all answer. The right move depends on your risk tolerance, financial flexibility, and how long you plan to stay in your home.

Here’s a quick guide to help you decide:

Key insight: Fixed-rate mortgages are still reasonably priced, and for many homeowners, the extra cost is worth the peace of mind. But for those who are more flexible—or believe rate cuts will come fast and deep—variable could offer long-term savings.

source: cmls.ca

What Are the Experts Saying About What’s Next?

Economic signals are mixed, and that’s making this a more strategic decision than ever.

According to CMLS Financial’s Broker Market Report (Q2 2025):

“Borrowers are leaning cautious, even as the market hints at relief. The gap between fixed and variable has narrowed, and sentiment remains fragile.”
(Source: CMLS.ca)

And CREA’s April 2025 housing forecast points to gradual recovery, not a boom:

“Sales are expected to pick up through the back half of the year, particularly if interest rates begin to ease. That said, price growth will likely remain modest.”
(Source: CREA)

That could mean a calmer market—without the kind of runaway price spikes we saw in 2020–2022.

The Bottom Line: Don’t Try to Time the Market—Tailor Your Strategy

Whether rates fall fast or stay sticky, your mortgage decision should be based on your goals and your comfort with risk—not headlines or predictions.

Variable rates may win over time—but only if you’re financially and mentally prepared for the ride. Fixed rates offer clarity and protection in a still-uncertain year.

At the end of the day, the right rate is the one that works for your situation, not just the one that’s lowest today.

Let’s Run the Numbers Together

Whether you're buying, refinancing, or renewing, let’s talk through your options with real data—not just forecasts. I’ll show you what fixed and variable would look like based on your goals, term length, and financial setup.

📞 (403) 771-8771
📧 anita@anitamortgage.ca

Sources:

• WOWA.ca – Interest Rate Forecast
• Canadian Mortgage Trends – Liberal Election & BoC Policy Outlook
• CREA – Canadian Housing Market Forecast
• CREA – April REALTOR.ca Infographic
• CMLS – Q2 2025 Broker Market Report