What mortgage borrowers in Calgary and Edmonton need to know about April’s rate decision
The Bank of Canada (BoC) will announce its latest interest rate decision this Wednesday, April 16—and while bond market investors are betting on a pause (with 60% odds), I believe a rate cut is not only likely—it’s necessary.
Here’s why, and what it means for you if you have a mortgage or are shopping for one.
Recap: Where We Stand Now
The BoC’s policy rate currently sits at 2.75%, which the Bank itself considers a “neutral” level—neither stimulating nor restricting the economy. But if the Bank wants to stimulate demand, it estimates it will need to drop that rate closer to 2.00%.
That’s why, even though the Bank has cut rates seven times in a row, I expect them to go further this week.
Why a Cut Makes Sense Right Now
There are a few key reasons why the BoC should lean toward easing:
1. The Job Market Just Took a Hit
Canada lost 33,000 jobs in March, marking our first monthly employment drop in over three years. And according to the BoC’s own Business Outlook Survey, a full one-third of Canadian businesses now expect a recession within the next year.
2. Consumer Confidence Is Slipping
With job worries and financial anxiety growing, Canadians are pulling back on discretionary spending. That’s bad news for an economy already feeling the effects of global trade tensions.
3. Inflation Is Up—but Still Manageable
Yes, Canada’s CPI came in at 2.6% in March—above the 2% target. But the Bank’s inflation mandate allows for a target range of 1% to 3%, precisely to give them room to react to external shocks like… say, a trade war.
Deputy Governor Timothy Lane has even said the Bank would be willing to accept a slower return to target “to avoid adverse effects on financial stability.” If there was ever a time to use that flexibility, it’s now.
Disinflationary Tailwinds Are Picking Up
If the Bank is worried about inflation, it should take note of several developments that suggest cooling is already underway:
| Disinflationary Force | Impact on Inflation |
|---|---|
| Oil Prices | Crude prices recently hit 4-year lows |
| Carbon Tax Cancellation | Expected to lower fuel costs |
| Rising Loonie | Makes US imports cheaper |
| Falling Mortgage Rates | Eases cost pressure from housing |
| Slowing Wage Growth | Reduces upward pressure on overall prices |
But What About Mortgage Rates?
Even as variable-rate cuts are on the table, fixed mortgage rates have already started to rise.
That’s because US bond yields surged last week. President Trump’s unpredictable tariff moves spooked investors, pushing the US 10-year Treasury yield up by 0.66%, its biggest jump since 2021.
As usual, Canadian bond yields followed suit:
| Bond Type | Change Last Week |
|---|---|
| 5-Year Government of Canada (GoC) Bond | Up 0.40% |
As a result, lenders have begun raising fixed mortgage rates. Until we get clarity from the Bank of Canada this week, expect continued upward pressure.
Variable-rate mortgages, meanwhile, have become less attractive lately as credit spreads widen—shrinking the discounts typically offered off prime.
What Should Homeowners in Calgary & Edmonton Do?
The Calgary and Edmonton housing markets are still more affordable than most of the country, but every interest rate change matters—especially for buyers, sellers, and renewals.
Here’s what I recommend:
- Considering breaking a fixed mortgage? Make sure the savings outweigh the penalty—especially as fixed rates rise.
- Renewing this year? Don’t just take your lender’s first offer. Market volatility means big differences between lenders right now.
- Buying this spring? Get pre-approved now to lock in today’s rate before more lenders follow suit and increase fixed pricing.
My Take: Expect a 0.25% Cut on April 16
The economy is weakening, sentiment is dropping, and inflation, while still elevated, is poised to cool. Unless markets turn unexpectedly volatile, I believe the BoC should—and will—cut its rate by 0.25% this week.
If you’re in Calgary or Edmonton and wondering what this all means for your mortgage, I’d be happy to walk you through your options.
Reach out today to run the numbers. Whether you’re buying, renewing, or refinancing, having a smart mortgage strategy could save you thousands.
