The 2025 Canadian Christmas List: Lower Rates, Please
As we crawl into 2026, the housing and mortgage world feels like a weird mashup:
Rates that were going down
Rates that just jumped back up
A local London market that’s quietly turned into a buyer’s playground
And a country that still hasn’t really fixed its housing mess
Let’s unpack it all in plain language.
1. Fixed rates: the Grinch shows up in the bond market
Fixed mortgage rates in Canada follow one thing: Government of Canada bond yields.
Recently, those bond yields didn’t drift higher – they popped:
Roughly 20–30 basis points (0.20%–0.30%) up on the 3- and 5-year bonds in no time
Traders saw a “strong” jobs report and did what traders do: trade the headline, not the footnotes
That one move basically took:
3-year and 5-year fixed rates that started with a “3”
And shoved a whole bunch of them up into the low 4s
You might’ve seen this in real time:
Last week: 3.99%
This week: “Oh hey, 4.19% or 4.34% now…”
Nothing changed in your life.
The bond market flinched, and lenders reached for the “reprice” button.
What does this mean for you?
If you’re holding an approval or renewal with a fixed rate that starts with a 3 and the payment works:
That’s a legit gift in this environment. Don’t over-shop it to death.If you wait “just to see,” you’re gambling on bond traders waking up in a good mood.
2. Variable rates: stuck at the kids’ table
Variable and adjustable rates follow the Bank of Canada, not bonds.
Right now:
The Bank of Canada has already cut this year.
It’s signalling “we’re on pause for a while”, not “we’re slamming rates back to zero.”
Some banks and economists now think:
No more cuts through 2026
Maybe even a hike late next year if inflation flares again
Others look at the underlying economy – part-time jobs, people giving up on job searches, early weakness in sectors like manufacturing and retail – and say:
“Relax. The slowdown hasn’t fully shown up in the data yet. There’s room for more cuts if things roll over.”
It seems the economy moves first. The data admits it later.
Big shifts (trade wars, tariffs, money printing, rate shocks) take 12–24 months to really show up in unemployment and growth.
So where does that leave variable?
Short term: variable rates have probably stopped falling.
Medium term: if the slowdown gets real, there’s still a decent shot at more cuts down the road.
Right now: variable is often the cheapest rate on the sheet again – if you can handle movement.
If you’re already in variable:
Don’t panic and lock into a high fixed rate just because the bond market freaked out for a week.
Breathe. This is where math beats emotion.
3. How we got here: a decade of cheap money and “dog crate” condos
Let’s zoom out for a second.
For years, central banks ran crazy cheap money:
Quantitative easing (QE)
Rock-bottom interest rates
The whole system designed to inflate asset values – especially housing
We printed “wealth” on paper:
Low rates
Easy borrowing
Home prices shot up like a meme stock
Then layer on top:
The greenbelt boxing in the GTA
A planning system that says “build more density” on paper, then fights every mid-rise and triplex in real life
Endless “dog crate” condos that don’t actually solve family housing needs
Result?
Crazy high prices, not matched by incomes.
Now rates are higher, the free-money party’s over, and 2025 is the hangover.
4. Southern Ontario & London: two sides of the same problem
Here’s the twist:
Southern Ontario isn’t building enough
Across much of southern Ontario, housing starts are down hard in 2025.
We’re talking more than a one-third drop in new builds versus recent years.
That means:
Fewer new homes in the pipeline
Less “missing middle” product
Long-term supply still choked
So even if prices soften right now, we’re planting the seeds for the next supply crunch.
But London? Right now, buyers are in the driver’s seat.
London’s November numbers paints a very different immediate picture:
Benchmark price: down tens of thousands from last year
Average price: down
Median price: down even more
Sales: among the worst Novembers in the last decade
Months of inventory: the highest heading into December in years
That’s not subtle.
That’s a buyer’s market.
What does that look like in real life?
More listings sitting
Prices easing
Houses selling under asking
Buyers actually using financing conditions, home inspections, and even conditions on the sale of their existing home
In other words: the exact stuff people were told they “weren’t allowed” to do in 2021 is now back on the menu.
If your realtor is still playing 2021 “bid-war hero” in a 2025 buyer’s market, that’s a problem.
5. Affordability: not fixed, but better than last year
Is housing “affordable” now?
No. Let’s not insult anyone’s intelligence.
But in London specifically:
Prices are down significantly from last year
Fixed rates – even after the recent bump – are still a bit better than late-2024 levels
On a typical benchmark home, monthly payments are lower than this time last year, thanks to that combo
6. So… is now a good time?
Here’s the honest take:
There’s no universal “good time”.
There’s only: “good time for you, based on your numbers, your job, your timeline.”
But here’s what I do see right now:
First-time buyers
You finally have:
More choice
Less panic
The ability to protect yourself with conditions
Prices are off their highs, and you’re not competing with 30 offers and a TikTok influencer.
Your job is not to time the bottom perfectly.
Your job is to:
Make sure your payment fits real life, not fantasy life
Leave room for rates to wiggle 0.5–1%
Refuse to be bullied into waiving every condition “because someone else might want it”
If that’s how the conversation is going, we’re happy to help you change who you’re talking to.
Renewals in the next 6–12 months
If your lender sent you a limited time early offer, it might be the Christmas equivalent of a pair of socks.
In this market, any future plan is worth looking into.
Start the renewal process early so you can actually shop, not beg
Move-up buyers & investors
You’re juggling:
Selling in a softer market
Buying in a softer market
The good news:
You can negotiate
You can insist on protecting yourself
You don’t have to throw your brain out the window to compete
The caution:
Don’t build your entire plan on “rates will definitely drop more.”
Build it on “we’re fine if they don’t, and happy if they do.”
7. What’s actually on the 2025 Christmas list?
If we’re honest, here’s what a sane Canadian Christmas list looks like:
Lower rates… eventually – but not so fast we blow another bubble.
More honest data, less spin – from governments, boards, and banks.
Actual housing policy that builds what people need, not just more investor boxes in the sky.
Buyers who keep their thinking caps on – and don’t get emotionally steamrolled into bad deals.
And selfishly…
More people who want a guide, not a salesperson.
Because that’s where we come in.
8. Where Mortgage Teacher fits in all this
Our job isn’t to cheerlead the market.
It’s to sit down with you, run the numbers, translate the noise, and say:
“Yes, this makes sense for you.”
Or “You know what? Wait. You’re not ready, and that’s okay.”
So if you’re:
Staring at a renewal letter
Thinking about buying in 2026
Or just trying to figure out if any of this makes sense for your family
Book a quick call or fill out the form on our main page by clicking here.
We’ll look at your situation, not just the headlines, and help you build your own plan instead of living inside somebody else’s sales pitch.
