The Bank of Canada has reduced its overnight lending rate by 25 basis points to 2.75%, citing mounting economic uncertainty caused by ongoing trade tensions with the United States. In his announcement, Governor Tiff Macklem acknowledged that the economy had started the year on strong footing, with solid GDP growth and inflation remaining within the Bank’s 2% target. However, he emphasized that uncertainty surrounding tariffs has led to a decline in business investment and consumer confidence, particularly in the manufacturing sector. Impact of Trade War on the Economy The decision to cut the interest rate comes as Canadian businesses brace for the economic fallout from escalating U.S. tariffs. Many companies have already adjusted their sales forecasts downward, anticipating disruptions in trade. “While the full impact of new tariffs on economic activity is yet to be seen, our research indicates that uncertainty surrounding the Canada-U.S. trade relationship is already influencing business and consumer decisions,” Macklem stated. Despite the challenges, Macklem noted that a short-term surge in exports ahead of the tariffs could provide some relief to economic growth. Addressing Inflation and Business Costs According to the Bank’s internal analysis, Canadian businesses are likely to raise prices to counter the rising costs associated with tariffs. This poses a unique challenge, as reduced consumer and business spending typically lowers inflation, while increased import costs could push it higher. “We’re facing a new crisis,” Macklem warned. “The severity of the economic impact will depend on the extent and duration of the tariffs, but even the uncertainty alone is already causing harm.” The Bank of Canada has acknowledged that while it cannot directly shield the economy from the financial strain of tariffs, it can use interest rate adjustments to help manage inflationary pressures. Future Economic Outlook Despite growing concerns, Macklem avoided using the term "recession" in his remarks. When asked whether Canada is at risk of an economic downturn, Deputy Governor Carolyn Rogers stated that the Bank has yet to release a formal forecast. Economists are closely monitoring the situation, with some predicting further rate cuts in the coming months. BMO Chief Economist Douglas Porter suggested that the Bank of Canada is likely to continue lowering rates, expecting a 25 basis point reduction at each of the next three policy meetings, which could bring the rate down to 2%. The Bank of Canada’s next interest rate announcement is scheduled for April 16, alongside the release of its quarterly monetary policy report, which will provide further insight into the economic outlook.

The Bank of Canada is widely expected to lower its benchmark interest rate to 2.75% at its upcoming policy meeting next week, with more cuts potentially on the horizon. Weak Job Growth Strengthens the Case for a Rate Cut Canada’s latest employment data has added weight to expectations of a rate reduction. According to Statistics Canada, the economy added only 1,100 jobs in February , far below economists' predictions of 20,000. Despite this disappointing report, the national unemployment rate held steady at 6.6% . This slowdown in job creation comes after months of stronger growth and has some analysts convinced that the central bank will need to take action. David Rosenberg, president of Rosenberg Research & Associates,  stated that the odds of a rate cut at next week’s Bank of Canada meeting have surged from 50% to 85%  following the latest employment data. Job gains were concentrated in retail and wholesale trade (+51,000) and finance, insurance, and real estate (+16,000) . However, professional, scientific, and technical services shrank by 1.6% , while transportation and warehousing employment dropped 2.1% —a sector that has already seen a 2.6% decline over the past year . U.S. Tariffs and Business Uncertainty Weighing on the Economy Some economists point to growing uncertainty around U.S. trade policies as a factor impacting hiring decisions. Nathan Janzen, assistant chief economist at RBC,  noted that businesses in trade-sensitive industries are becoming more cautious, which could be leading to hiring slowdowns. This economic uncertainty isn't just a Canadian concern. In the U.S., Federal Reserve Chair Jerome Powell  has indicated that the Fed is treading carefully, balancing inflation concerns with potential economic weakness. While U.S. job growth remained steady in February, markets expect at least one rate cut from the Federal Reserve by mid-year if conditions soften further. Market Odds Strongly Favor a Rate Cut With the Bank of Canada’s next policy decision set for March 12 , investors are increasingly convinced that a rate cut is coming. Money markets now reflect a 76% probability of a rate cut to 2.75% , up from 69% before the latest employment report. Even more telling, the swaps market suggests that additional rate cuts could follow. The likelihood of another cut in April has climbed to over 90% , with some analysts projecting rates could dip below 2.5% by the end of 2025  if economic conditions remain weak. What This Means for Mortgage Holders For those with variable-rate mortgages or lines of credit, a rate cut could offer some relief on monthly payments. If the Bank of Canada moves forward with multiple rate cuts this year, we could see mortgage rates soften, providing more affordability for homebuyers and relief for those carrying debt. As always, I’ll be watching the Bank of Canada’s decision closely. If you have questions about how these changes could impact your mortgage, feel free to reach out. This version keeps it professional, informative, and tailored to your audience while reinforcing your expertise as a mortgage broker. Let me know if you'd like any adjustments!

Canada’s latest Labour Force Survey  for February signals a slowdown in job creation, reinforcing expectations that the Bank of Canada (BoC) will cut interest rates next week . The economy added only 1,100 jobs last month , a sharp contrast to the 211,000 jobs gained over the previous three months . Despite the weak hiring data, the unemployment rate held steady at 6.6% , following modest declines in December and January. However, the broader trend shows that job growth is struggling to keep up with population growth , which could put more pressure on policymakers to ease monetary policy. Mixed Employment Trends Across Sectors The job market saw gains in wholesale and retail trade (+51,000) and finance, insurance, and real estate (+16,000) . These industries have been expanding steadily in recent months , with retail bouncing back from a low point in mid-2024. However, job losses in professional, scientific, and technical services (-33,000) and transportation and warehousing (-23,000)  dragged down overall employment numbers. The transportation sector has now seen a 2.6% decline in employment over the past year , indicating potential underlying economic weakness. Meanwhile, total hours worked fell by 1.3% in February , marking the biggest monthly decline since April 2022. This suggests that even those who remain employed may be seeing reduced workloads , another sign that the economy is slowing. Tariffs, Trade Uncertainty, and Job Market Softening Beyond the weak job growth, uncertainty around U.S. trade policies continues to weigh on Canadian businesses . With President Donald Trump reintroducing tariffs , industries reliant on cross-border trade are pulling back on hiring  and bracing for potential disruptions . This uncertainty isn't isolated to Canada. Recent U.S. job data also came in weaker than expected , and inflation pressures remain sticky south of the border , making it difficult for the Federal Reserve to adjust its own rate policy . As U.S. consumers cut back on spending , businesses may rethink hiring plans, which could have ripple effects on the Canadian economy. Interest Rate Cuts Now More Likely With the Bank of Canada’s next rate decision scheduled for March 12 , financial markets are now pricing in an 85% chance  of a 25-basis-point cut , up from 75% before the jobs report was released. The likelihood of another rate cut in April is also rising , with some analysts predicting the central bank could lower rates below 2.5% by the end of 2025 . For mortgage holders, lower interest rates could bring relief  by making borrowing more affordable. If the BoC moves ahead with multiple cuts this year, variable-rate mortgage holders could see reduced payments, and new buyers may find it easier to qualify for financing . What This Means for You As the economic landscape shifts, it’s crucial to stay informed about how rate changes might impact your mortgage and borrowing power . If you have a variable-rate mortgage or are considering refinancing , now could be a good time to evaluate your options. If you have any questions about how these changes might affect your financial plans, feel free to reach out—I’m always happy to help. This version keeps the article professional and relevant while making it engaging for your website visitors. It emphasizes how these economic shifts could impact mortgage holders, reinforcing your expertise in the field. Let me know if you’d like any refinements!

Rocket Mortgage is officially shutting down its Canadian operations, with the U.S. lending giant set to exit the market entirely by June 27. The move comes as its parent company, Rocket Companies, shifts focus back to the American housing market, where it has been a dominant player for nearly 40 years. In a statement, Rocket Mortgage Canada confirmed the decision, saying, “The decision aligns with our parent, Rocket Companies, focusing on growing in the American housing market. While this means stepping away from our lending business in Canada, we thank our team members who have helped us expand over the last five years. Their hard work and passion have helped thousands of Canadians achieve the dream of homeownership, and we appreciate all their contributions.” A handful of employees will be absorbed into Rocket’s other Canadian businesses, like Lendesk and Rocket Innovation Studio, but most of the staff will be laid off. Existing mortgage files in progress will continue as planned, with Rocket assuring clients they’ll be supported through the transition. Windsor city councillor Renaldo Agostino addressed speculation that Rocket’s exit was tied to the recent trade war launched by U.S. President Donald Trump. “There’s talk that this had something to do with Trump and the tariffs. It doesn’t,”  he said in an interview with AM800’s The Dan MacDonald Show . “Rocket is still going to have a presence in the country – just that end of their business [mortgage lending] will not be here.” Rocket Mortgage entered Canada in 2020 through a partnership with Edison Financial, fully rebranding the brokerage under the Rocket name by 2022. It officially started lending in Canada in 2023 and even launched a broker channel, Rocket Mortgage Pro, in 2024. But just a year later, the company has decided to pack up and leave. Is Rocket the Canary in the Coal Mine for Canada’s Housing Market? The real question here is: does Rocket Mortgage’s exit signal deeper trouble in Canada’s real estate market? Canada has been riding an unprecedented housing boom for years, fueled by low interest rates, record immigration, and demand far outpacing supply. But with affordability at historic lows, mortgage defaults creeping up, and higher borrowing costs squeezing buyers and homeowners, is the tide turning? Rocket Mortgage is known for its aggressive, high-volume lending strategy. If it no longer sees enough profitability in Canada to justify staying, that raises concerns about the overall health of the market. Are other lenders seeing similar warning signs? Are we nearing the tipping point where prices correct, lending tightens, and overleveraged homeowners start feeling the pain? Some will argue that Rocket Mortgage simply couldn’t compete with Canada’s heavily regulated banking system, where the big five banks dominate the mortgage space. But others might see this as the first major player pulling out before things get worse. One thing is certain: if the housing market were in great shape, Rocket Mortgage wouldn’t be leaving.

Canadian Mortgage Rates Poised to Drop Amid Escalating Trade War Trudeau Accuses Trump of Economic Sabotage as Tariff Battle Intensifies Canadian mortgage rates could see a sharp decline as a deepening trade war between Canada and the U.S. rattles financial markets. The ongoing dispute, fueled by U.S. President Donald Trump’s aggressive tariff policies, has triggered a sharp drop in bond yields and raised expectations of multiple Bank of Canada rate cuts in the coming months. On Tuesday, five-year Government of Canada bond yields—often a leading indicator for fixed mortgage rates—fell to 2.63%, down from 2.87% in mid-February. Major Canadian banks, including RBC and BMO, now anticipate the Bank of Canada (BoC) may implement deeper rate cuts than previously expected. In a strongly worded televised statement, Prime Minister Justin Trudeau accused Trump of deliberately trying to cripple the Canadian economy to pave the way for U.S. annexation. “What he wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us,” Trudeau said. “That’s never going to happen. We will never be the 51st state, but yeah, he can do damage to the Canadian economy, and he started this morning.” Trump’s latest tariffs include a 25% levy on all Canadian goods and a 10% charge on Canadian energy exports. In response, Canada has implemented retaliatory measures, though Trump warned via Truth Social that any counteractions would be met with further U.S. tariff hikes. Political Leaders React to Trump’s Trade War The escalating situation has drawn responses from across Canada’s political spectrum. Conservative Party leader Pierre Poilievre vowed to defend Canada’s economy, while co-deputy leader Melissa Lantsman, speaking at the Mortgage Professionals Canada symposium, warned that Trump’s actions would have lasting consequences. “We’re about to enter into what can only be described as a tariff war,” Lantsman said, criticizing Ottawa’s economic policies and regulatory hurdles that she believes weaken Canada’s ability to compete with the U.S. Meanwhile, NDP leader Jagmeet Singh called for an emergency session of Parliament—prorogued since January—to unite political leaders against Trump’s trade measures. Bank of Canada Expected to Respond with Aggressive Rate Cuts Economists believe the Bank of Canada will be forced to adjust its policy in response to the economic uncertainty caused by the tariffs. RBC’s chief economist, Frances Donald, and assistant chief economist, Cynthia Leach, now predict the BoC will cut rates more aggressively than initially forecast. “Without tariffs, we expected the BoC to gradually lower rates to 2.25%,” they stated. “Now, we anticipate deeper cuts as long as tariffs remain in play.” BMO’s chief economist Doug Porter echoed this sentiment, suggesting the BoC could drop rates to 2% by July, implementing multiple quarter-point cuts in the coming months. As the situation unfolds, fears of a Canadian recession are growing. RSM Canada economist Tu Nguyen warned that rising consumer prices, higher unemployment, and decreased spending could lead to an economic downturn. Former Bank of Canada governor Stephen Poloz has also cautioned about Canada’s underlying economic vulnerabilities. However, there may be room for de-escalation. U.S. Commerce Secretary Howard Lutnick hinted on Tuesday afternoon that Trump might reconsider some of the measures against Canada and Mexico in the coming days. For now, the impact of the trade war is being felt in financial markets, with mortgage rates likely to continue their downward trajectory as uncertainty looms. This version keeps the critical information intact while making it more engaging and suitable for personal posting. Let me know if you’d like any tweaks!

Survey Shows 60% of Homeowners Cutting Back to Manage Increased Payments As over a million Canadian mortgages come up for renewal in 2025, homeowners are preparing for substantial increases in their monthly payments. Many had locked in record-low interest rates in previous years, but those deals are now expiring, bringing financial strain to households across the country. A recent Royal LePage survey  found that 57% of renewing homeowners anticipate higher mortgage costs , with 22% expecting a significant jump . The financial impact is widespread— 81% of those facing higher payments say it will put pressure on their household budgets . Canadians Adjust Budgets to Cope with Rising Costs To manage these rising costs, many homeowners are making lifestyle and spending adjustments : 60% are reducing discretionary spending  (entertainment, dining out, etc.) 43% are cutting back on travel 36% are saving or investing less 34% are reducing essential expenses like groceries and gas 23% are exploring additional income sources, such as a second job Despite these challenges, homeownership remains a priority for Canadians. "Even in difficult financial times, Canadians are committed to keeping their homes and paying down their mortgages, even if it means cutting other expenses,"  said Phil Soper, CEO of Royal LePage . More Homeowners Considering Variable-Rate Mortgages As mortgage rates trend downward, some homeowners are reconsidering their financing strategies. While 66% still prefer fixed-rate mortgages , the share of those opting for variable-rate loans has grown to 29%, up from 24% . "With the Bank of Canada implementing multiple rate cuts, variable mortgage rates have become more appealing for homeowners looking to lower monthly payments or pay off their principal faster,"  Soper explained. Economic Uncertainty and Potential Rate Cuts Ongoing trade tensions between Canada and the U.S. could add another layer of uncertainty. According to the survey, if trade conflicts escalate, the Bank of Canada may be forced to introduce more aggressive rate cuts to counter inflationary pressures . "While economic instability isn't ideal, it could lead to lower borrowing costs for new homebuyers and those renewing their mortgages,"  Soper added. Regional Differences in Mortgage Renewal Impact The financial strain isn’t felt equally across the country: Saskatchewan and Manitoba  have the highest levels of concern, with 89% of homeowners anticipating financial difficulty . Atlantic Canada  follows closely, with 64% expecting higher costs . Quebec homeowners are the least worried , with 73% saying they don’t foresee major financial hardship . In response to affordability concerns, 11% of homeowners are considering relocating  to a more budget-friendly region, while 10% are thinking about downsizing or renting out part of their home  to offset mortgage expenses. Despite these challenges, Canada’s mortgage delinquency rate remains low at 0.20% as of Q3 2024 , according to Canada Mortgage and Housing Corporation (CMHC) . While higher renewal rates pose financial hurdles, Canadians continue to prioritize homeownership, adjusting their budgets and considering new mortgage strategies to navigate the changing landscape.

Introduction: Canadian mortgage rates have surged in recent years, but they’re now facing downward pressure as economic risks mount. With the prospect of new U.S. tariffs  on Canadian goods looming, many wonder if rates could plunge back to the rock-bottom levels seen during the 2008–2010 Great Recession and the 2020 COVID crisis. Below, we analyze this likelihood by comparing historical rate lows to today’s levels, examining the Bank of Canada’s policy stance, assessing the tariff-driven economic impact, reviewing expert forecasts, and mapping out possible scenarios for significant rate drops. Historical Comparison: 2008–2010 & COVID Lows vs. Current Rates During the 2008–2010 financial crisis, interest rates in Canada hit unprecedented lows . The Bank of Canada slashed its overnight rate to just 0.25% in 2009  – effectively the lower bound – to fight the recession ( Recession of 2008–09 in Canada | The Canadian Encyclopedia ). Canadian mortgage rates followed suit. The average variable mortgage rate plunged to about 1.95% in 2009 , down from roughly 4.45% in 2008 ( Mortgage Rate History - Super Brokers ). Five-year fixed mortgage rates also fell, dropping from over 7% before the crisis to the mid-5% range by 2009–2010 ( Mortgage Rate History - Super Brokers ). These were, at the time, historic lows  for mortgages. Fast forward to the COVID-19 pandemic , and rates fell even further. In 2020, the Bank of Canada again cut its policy rate to 0.25% , and mortgage rates hit record lows , with some 5-year fixed loans available near 1.5–2%  ( Mortgage Rate History in Canada - NerdWallet ). Those ultra-low rates helped fuel a housing boom and were unprecedented in modern Canadian history. Today, however, rates have rebounded . After aggressive hikes to combat post-pandemic inflation, the Bank of Canada’s overnight rate sits around 3.0%  (as of early 2025) ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). Five-year fixed mortgage rates are now in the mid-4% to 5% range, and variable rates (tied to prime) are roughly in the high-4% range – the highest borrowing costs in over a decade  ( Mortgage Rate History in Canada - NerdWallet ). In short, current rates are far above the crisis-era lows of 2008–2010 or 2020. The key question is whether a tariff-induced economic downturn could drive rates back down near those historic troughs. Bank of Canada’s Monetary Policy and Rate Cut Outlook The Bank of Canada (BoC)  has recently shifted from raising rates to easing mode as inflation has moderated. After peaking at a 5.0% policy rate in 2023 ( Monetary policy, interest rates and the Canadian dollar - Bank of Canada ), the BoC has begun cutting rates – reaching 3.00% by January 2025 ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) – and ended its quantitative tightening program ( Bank of Canada reduces policy rate by 25 basis points to 3%, announces end of quantitative tightening - Bank of Canada ). Markets and economists widely anticipate further gradual cuts. In fact, the BoC’s own surveys show forecasters expecting the policy rate to fall to roughly 2.5% by the end of 2025  under a normal scenario ( Monetary policy, interest rates and the Canadian dollar - Bank of Canada ). Private bank forecasts echo this: for example, RBC and other major banks see the overnight rate drifting down into the low-2% range by late 2025 ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). This baseline assumes no major shocks – a steady decline in rates, but not  a free-fall to zero. Importantly, the BoC’s neutral interest rate  (the rate consistent with stable inflation and full employment) is estimated around 2.25–3.25% ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). With the current policy rate at 3%, Canada is just at the upper end of neutral. This gives the Bank room to cut rates without venturing into extraordinary stimulus territory – a point BoC officials have noted in the context of potential shocks ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). In other words, if growth deteriorates, the Bank can slash rates further and fairly quickly. Bank of Canada leaders have also flagged the threat of U.S. tariffs as a major uncertainty. In its January 2025 report, the BoC projected that “in the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2%. But the threat of new tariffs is causing major uncertainty.”  ( Bank of Canada reduces policy rate by 25 basis points to 3%, announces end of quantitative tightening - Bank of Canada ) This suggests that if those tariffs do hit, the Bank is prepared to adjust policy accordingly – likely by cutting rates faster or further to cushion the economy. BoC Governor Tiff Macklem has signaled a balanced approach: “We will need to carefully assess the downward pressure on inflation from the weakness of the economy, and weigh that against the upward pressure on inflation from higher input prices and supply chain disruptions” ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). In plain terms, the Bank would be focused on supporting growth  if the economy weakens, even if tariffs cause a temporary inflation spike. Tariffs’ Economic Impact: Inflation, Employment & Growth Risks ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) Upcoming U.S. tariffs threaten to hit Canada’s economy like a one-two punch – raising import costs (fueling inflation) while hurting exports and growth. The upcoming U.S. tariffs  on Canadian exports represent a significant downside risk to Canada’s economy. The scenario being discussed involves steep duties (reports mention figures like 20–25% tariffs on Canadian goods, including oil and gas ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada )). Such trade barriers would raise the cost of imports and exported goods, likely creating a burst of “cost-push” inflation – higher prices stemming from supply chain costs, not booming demand. At the same time, tariffs would crimp demand for Canadian products, drag down exports, and dent business confidence. Economists warn this kind of trade shock could act like a “jackhammer” on the economy, simultaneously slowing growth and elevating inflation  ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). Several projections paint a stark picture. For instance, Oxford Economics analysts estimate that broad U.S. tariffs could cut Canadian GDP by about 2.5% , push unemployment up toward 8% , and temporarily spike inflation to ~7% ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). Even more targeted tariffs (on select sectors like steel) could be enough to tip Canada into recession  ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). In essence, a full-blown tariff war would create a stagflationary  scenario – weaker economic output alongside higher prices. We saw a mini-version of this in 2018–2019’s trade tensions, but the proposed 2025 tariffs are larger in scope. How would the Bank of Canada react to such a dilemma? Likely by prioritizing the growth and employment side of its mandate. A surge in prices due to tariffs is not “normal” inflation driven by excess demand – it’s a one-time tax on imports that can choke the economy. Historically, central banks have been cautious about raising rates in response to supply-driven inflation  spikes, because doing so can deepen the downturn ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). Governor Macklem’s comments above reinforce that the BoC would weigh the weak economy vs. high import prices carefully ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). Most analysts expect the Bank would cut rates to support the economy  if tariffs hit, despite the inflation uptick. Indeed, the “bigger problem” is likely to be job losses and a contraction, so the tariff-driven inflation may be largely “overlooked” by policymakers ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). The Bank would shift from fighting inflation (which was its focus in 2022–2023) to fighting a potential recession , assuming inflation expectations remain anchored. That said, tariff-related inflation could limit how fast or how far the BoC eases . Policymakers wouldn’t want to completely ignore a 7% inflation rate if it proved persistent. Some experts caution that ongoing cost pressures and trade volatility “may still limit the BoC's ability to cut rates as quickly as the economy requires.”  ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ) In practical terms, the Bank might cut rates, but perhaps a bit more gradually if inflation is running hot – at least until it’s clear that the economic slowdown is taming underlying inflation. This balancing act will be crucial in determining how low rates can go. If the downturn is severe enough, the BoC can and likely will tolerate a temporary inflation overshoot in order to shore up growth. Expert Forecasts: Interest Rates and Mortgage Trends Market experts and forecasters are already adjusting their outlook  in light of the tariff threat. Virtually all major bank economists anticipate more BoC rate cuts in 2025 – the debate is over how many and how quickly. Here’s what some experts are saying: BMO Capital Markets:  BMO warns that if the U.S. tariffs are enacted, the Bank of Canada “may be forced to cut its policy rate to 1.50% by year-end”  ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). This would be a full percentage point lower than BMO’s no-tariff baseline forecast (which was 2.50%). In other words, BMO sees the overnight rate dropping into the 1%–2% range  in a tariff scenario, compared to mid-2% otherwise. Such an outcome would be the lowest policy rate since 2020’s emergency cuts. BMO economist Michael Gregory noted this would require a much more aggressive rate-cutting cycle  than previously expected ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). It’s a significant forecast: 1.50% overnight rate implies prime lending rates around ~3.7% and variable mortgage rates possibly in the low-3% range – a dramatic decline from today. National Bank of Canada:  National Bank’s economists have gone so far as to call for emergency rate action  if tariffs appear likely. Believing tariff implementation was imminent, they argued there was a “strong argument for an inter-meeting  cut” of at least 50 basis points  (0.50%) ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). They point out that at a 3% overnight rate currently, the BoC still has room to slash rates quickly and should use it to “buttress financial conditions” before the full tariff impact hits ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). In National’s view, the shock to confidence from a trade war could warrant swift action rather than waiting for scheduled meetings. Beyond an initial big cut, they projected the BoC would follow up with its regular easing path – for example, 25 bps cuts in March and April  – bringing the rate down to around 2.0% by the spring of 2025  ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). That implies mortgage rates could fall accordingly (with variable rates dropping further and fixed rates following bond yields down). National Bank essentially envisions BoC front-loading cuts  to get ahead of a potential recession. TD Economics:  Analysts at TD also see significant easing on the table. In a study of even a smaller tariff shock (a hypothetical 10% tariff on all Canadian imports), TD concluded the BoC could be “forced into additional interest rate easing to the tune of 50–75 basis points” beyond the usual path ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). In other words, a moderate trade shock might add half to three-quarters of a percent in extra rate cuts. If a full 25% tariff package hit, the cuts might be larger. TD’s scenario underscores that even the threat of tariffs has shifted market expectations toward more cuts  ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). Already, bond yields and swap markets in late 2024 were pricing in a faster decline in Canadian rates, reflecting nervousness about growth ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). All this bodes for lower mortgage rates in 2025  than previously forecast, especially for floating rates. RBC and Other Banks:  The Royal Bank’s base-case outlook (assuming no trade war) is for gradual rate cuts into mid-2025 , likely bringing the overnight rate down to the low-2% range ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). RBC’s Chief Risk Officer noted in early 2025 that they expect the BoC to continue “gradually cutting rates into the middle of the year,” which will bring additional relief to variable-rate mortgage borrowers  ( RBC says it's ready for competitive spring mortgage market and upcoming renewal wave - Mortgage Rates & Mortgage Broker News in Canada ). In practice, even a baseline 2.0% policy rate would mean a substantial drop in mortgage costs from 2024 highs. Mortgage industry observers also highlight a looming wave of mortgage renewals in 2025, where many borrowers coming off sub-3% pandemic rates will face much higher renewals ( RBC says it's ready for competitive spring mortgage market and upcoming renewal wave - Mortgage Rates & Mortgage Broker News in Canada ). Banks like RBC are bracing for this “payment shock” for consumers, but any BoC rate relief will soften the blow. If tariffs cause a deeper cut in rates, it could help mitigate the renewal shock  somewhat, easing pressure on households. Mortgage Market Trend Experts:  Within the mortgage industry, there’s a view that a tariff-driven downturn would favor variable-rate mortgages due to falling rates. Dan Eisner, CEO of True North Mortgage, suggests that if “2025 turns into the year of tariffs, a variable rate might go even lower  than predicted,” potentially offering savvy borrowers a chance to save by riding rates downward ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). This implies that some expect BoC to overshoot to the downside on rates in a worst-case scenario. Fixed rates, which are tied to bond market expectations, have also started to ease on anticipation of BoC cuts. The consensus of most forecasters is that Canadian mortgage rates in 2025 will trend down , not up – the only question is by how much. Bottom line from experts:  Absent tariffs, most forecasts see the overnight rate bottoming out around 2.0%–2.5% , which is well above the ~0.25% floor of 2009 and 2020. But with  major tariffs, analysts like BMO and TD are penciling in substantially deeper cuts (potentially into the 1% range for overnight rates). That would be a return to exceptionally low interest territory, though perhaps not all the way to the absolute record lows unless the situation gets extremely dire. No major bank is yet predicting a definite reversion to near-zero rates  – that’s viewed as an emergency outcome if the economy really tanks. Scenarios: What Would It Take for Rates to Drop Significantly? Given the above factors, we can sketch a few scenarios for Canadian rates in response to the tariffs: 1. Moderate Impact (Tariffs Averted or Short-Lived):  In the best case, upcoming tariffs are delayed, scaled back, or quickly resolved. The Canadian economy would avoid a severe hit, and the BoC would likely continue with only modest, gradual rate cuts . Mortgage rates would edge down through 2025, but probably not crash back to 2008–2010 levels . For instance, the overnight rate might settle around 2.25%, and five-year fixed mortgages maybe dip into the low-4% range. That’s a relief from current levels but nowhere near the ~0.5% overnight and ~3% mortgage rates of the post-2008 period. 2. Full Tariff Implementation (Mild Recession):  If the U.S. imposes the tariffs as threatened (e.g. 20–25% across many goods) and Canada retaliates, we could see a technical recession  in Canada. Growth might turn negative for a couple quarters and unemployment would rise notably ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). In this scenario, the BoC would respond assertively. We’d expect larger rate cuts totaling perhaps 1.5–2 percentage points  over 2025 (consistent with BMO’s call for a 1.50% policy rate) ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ). That could bring the overnight rate down near ~1%, give or take. Mortgage rates could drop into the 3%–4% range  for many borrowers. This would approach the low levels of the early 2010s. For context, during the 2009 recession, five-year fixed rates fell to ~4–5% ( Mortgage Rate History - Super Brokers ) and variable rates around 2%. Under a mild recession scenario, we might revisit those kind of levels. It’s a significant drop from today, though perhaps still a tad higher than the absolute trough of the pandemic (when some fixed rates hit ~1.8%). 3. Severe Downturn (Deep Recession or Global Spillover):  There’s always a chance that tariffs could be a catalyst for a broader global downturn  – for example, if a trade war severely undermines business confidence, financial conditions tighten, and other countries’ economies also contract. In a severe recession , all bets are off. The Bank of Canada would likely revive crisis-era tools : cutting rates back near the zero lower bound (0.25% or even a technical zero) and possibly restarting large-scale asset purchases (quantitative easing) to stimulate the economy ( Bank of Canada reduces policy rate by 25 basis points to 3%, announces end of quantitative tightening - Bank of Canada ). This is the scenario where mortgage rates could truly return to 2008–2010 lows , or even the record lows of 2020 . We could imagine five-year fixed rates under 3% again and variable rates in the 1%–2% range – essentially a return to emergency monetary policy . However, this outcome would likely require more than just tariffs; it’d be tariffs plus  something like a major financial crisis or a U.S. recession that spills into Canada. It’s a tail-risk scenario rather than the base case. Most experts consider the full return to crisis-level interest rates to be a low-probability scenario  unless the economic damage is truly severe. The 2008–2009 and 2020 rate floors were responses to once-in-a-generation crises (a global financial meltdown and a pandemic). A trade war, while very harmful, might not reach that same level of severity on its own. Thus, the likelihood of Canadian mortgage rates returning all the way to 2008–2010 lows is relatively small  – it’s not impossible, but would likely require tariffs to trigger a deep recession or combine with other shocks. More likely, we’d see rates fall significantly but not all the way to the rock bottom . For example, a drop into the 1–2% policy rate range (and 3%–4% mortgages) is plausible under a tariff recession, matching the multi-decade lows  apart from the extreme 2020 episode. Conclusion In summary, Canadian mortgage rates are poised to decline  from their recent peaks as the Bank of Canada shifts to easing mode. The question is how far they will drop. In the absence of a major shock, they’ll probably settle moderately above the historic lows of 2009 and 2020. However, an escalation of U.S. tariffs could materially darken Canada’s economic outlook – undermining growth and employment – which in turn would prompt the BoC to cut rates more aggressively. Analysts and central bankers indicate that under a serious tariff scenario, interest rates could indeed fall much closer to crisis-era levels  than previously expected ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ). We could see overnight rates in the low 1% range and mortgage rates at least back to the low-single digits , if not lower. That said, revisiting the absolute lows of 2008–2010 (near 0% rates)  would likely require a worst-case outcome. Most forecasts stop short of predicting a return to zero, barring a deep recession. The BoC will try to manage a balance – providing enough stimulus to counteract the tariff “punch” to the economy ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ), but being mindful of not re-igniting inflation. Homeowners and buyers should thus expect lower mortgage rates ahead  – offering some relief – but should temper expectations about a return to the ultra-easy money of the post-2008 era. It’s not impossible, but it would take a confluence of negative factors for Canada to truly relive those record-low rate days. In essence, rates could “drop significantly”  under the tariff scenario, but whether they fully reach 2008–2010 levels  will depend on how harsh an economic storm the tariffs unleash and how the Bank of Canada navigates the trade-off between inflation and growth. Sources:  Historical mortgage rate data ( Mortgage Rate History - Super Brokers ) ( Mortgage Rate History in Canada - NerdWallet ); Bank of Canada statements and forecasts ( Monetary policy, interest rates and the Canadian dollar - Bank of Canada ) ( Bank of Canada reduces policy rate by 25 basis points to 3%, announces end of quantitative tightening - Bank of Canada ); Expert commentary from BMO, National Bank, TD, etc. ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) ( BMO forecasts 1.50% BoC rate by year-end if U.S. imposes tariffs on Canada - Mortgage Rates & Mortgage Broker News in Canada ) ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ); Economic impact estimates ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ); True North Mortgage analysis ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ) ( How Trump's Tariffs Could Impact Mortgage Rates in 2025 ).