In the best of economic times, trying to predict mortgage rates in Canada can be like trying to hold water in your hands.
That’s why experts like Sherwood Mortgage Group Level Two mortgage agent Joe Ferraro like to approach rates with caution for first-time homebuyers or clients looking to renew their mortgage.
“It all about the education,” Ferraro said on the Dec. 3 edition of AvranceCorp Presents. “It’s all about putting yourself in their shoes. What would you want someone to tell you? Don’t be a yes man. Don’t give them answers that are going to make them feel overly confident or overly comfortable. Tell them the truth. This is the market that we’re in right now. This is what’s potentially on the horizon.”
Currently, a five-year fixed insured mortgage rate in Ontario can be as low as 3.74 per cent, while a five-year variable insured mortgage rate in Ontario can be as low as 3.45 per cent. There are several factors that can influence mortgage rates, including market uncertainty with the American tariffs, inflation, unemployment, and bond yields.
“Because if inflation is high, the rates are probably going to be high,” “If unemployment is low or high, it affects the (mortgage) rate,” Ferraro explained. “It all depends on when we get inflation down, which we have. Once inflation gets down, the rate starts dropping.”
“There was the old adage: When it’s low rates, it’s high house prices. When it’s high rates, it’s lower house prices. It’s a different world for buyers and sellers. This is one of the few times in history where we’re not seeing that. People were so used to the pandemic rates, in the 1.3s and 1.4s that there was a big sticker shock with people renewing in 2025 and 2026 in the 3s and 4s. But if you look at the average over the last 25 or 30 years, we’re okay. People got too accustomed to the 1.4 or 1.3 or 1.69 variable that after five years, the world changed.”
It promises to be an interesting new year in particular for those looking to renew their mortgage.
“We’re looking at early to mid 2026 is similar to what we’re seeing right now,” Ferraro said. “They’re (economists) anticipating a tempered spring market. There are so many renewals coming up and the renewal shock. Remember, people in 2026 are renewing five-year mortgages from 2021, pandemic time. People at the 1.4 or 1.3 are going to be renewing at current market rates which are sitting in the low to mid 4s. So whatever amount of money they put to towards that mortgage, you better hope it wasn’t just interest-only or principal was paid down, because that balance now after five years is going to be paid at a much higher amount, whether it’s monthly, bi-weekly, or whatever payment terms they have.”
Meanwhile, many eyes are on Canadian prime minister Mark Carney and American president Donald Trump and the upcoming discussions regarding the USMCA trade agreement, which has a mandatory joint review scheduled for July 2026. The American tariffs significantly affected the Canadian economy in 2025, with Canadian company Algoma Steel being the most recent to announce layoffs.
“Don’t let anyone ever tell you they know the interest rates pattern,” Ferraro summarized. “Hundreds of people I have spoken to far more experienced than me have all been wrong. No one can predict it. No one could have predicted the pandemic. And everyone thought when the pandemic happened, that mortgage rates were going to go through the roof. They went the opposite way. They plummeted. And then the Bank of Canada flat-out said we have no reason to raise rates, rates will remain low until further notice. And then in a blink of an eye, they sky rocketed up.”
AvranceCorp Presents airs Wednesdays at 2:00 p.m. ET on the AvranceCorp YouTube channel.
About AvranceCorp Developments
AvranceCorp Developments is a Toronto-based real estate development company with a $4B+ portfolio and 7,000+ residential units in active development. Guided by urban planning principles and a commitment to innovation, AvranceCorp delivers communities that balance affordability, sustainability, and investor value.
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Director, Media & Investor Relations
AvranceCorp Developments
📧 kenai@avrancecorp.com
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