Interest Rate Outlook Becoming Less Clear-Cut
The outlook for interest rates is becoming less clear-cut as Canada’s major banks rethink how far the Bank of Canada will go in its rate-cutting cycle. While most still see room for further easing, RBC is breaking away from the pack. The bank has taken additional cuts off the table, forecasting the overnight rate will hold steady at 2.75% through 2026—making it the most hawkish forecast among the Big Six.
Revised Forecasts
In its latest Monthly Forecast Update, RBC said: "We no longer expect any rate cuts from the BoC this year." The bank explained that "as direct trade uncertainty facing Canada recedes…the inflation outlook remains uncertain," reducing pressure on the central bank to act further. That’s a shift from earlier this year, when RBC still expected one more cut before the cycle ended. By contrast, Scotiabank has revised its forecast lower, now projecting the policy rate to settle at 2.25%—down from 2.50% in its previous estimate.
Bank of Canada Target Rate Forecasts
BMO, meanwhile, remains the most dovish, continuing to project a fall to 2.00% by early 2026. TD, CIBC and National Bank continue to expect a terminal rate of 2.25%, in line with the Bank of Canada’s current inflation outlook.
Digital Mortgage Conference
Canadian Mortgage Trends, in partnership with Mortgage Professionals Canada and National Mortgage News, is proud to support one of the most influential U.S. conferences in mortgage technology: DIGITAL MORTGAGE. Taking place September 16–17 at the Loews Coronado Bay Resort in San Diego, this is the conference mortgage leaders are prioritizing—because it’s built by the very people shaping the future of the industry.
CMBS Delinquencies Edge Down
Canadian CMBS delinquencies ticked lower in May, with Morningstar DBRS reporting a 1.0% delinquent or specially serviced rate—down from 1.1% in April and well below the U.S. rate of 7.5%. According to Morningstar DBRS, overall maturity payoff rates held at 100%, with no realized losses reported in May.
Ontario Credit Union Assets Edge Higher
Ontario’s credit unions continued to expand their balance sheets in Q4 2024, with total assets rising to $99.61 billion, up 3.37% year-over-year, according to FSRA’s latest Sector Outlook report. Growth was led by a $1.42-billion jump in commercial lending and a 9.44% increase in cash and investments.
Mortgage Arrears Edge Up Slightly
The number of Canadian mortgages in arrears ticked up slightly in April, reaching 10,910 loans, or 0.22% of all residential mortgages, according to the latest data from the Canadian Bankers Association. Saskatchewan continues to report the highest arrears rate in the country at 0.53%, followed by Manitoba at 0.32% and both Atlantic Canada and Alberta at 0.27%.
Next Steps: Mortgage Industry Career Moves
Caroline Bacha, a seasoned professional in the banking industry, joins Manulife Bank as National Director – Broker Channel within the National Accounts team. With two decades of experience in the banking sector, Bacha brings a strong track record of broker relationship management and business development.
Conclusion
In conclusion, the outlook for interest rates in Canada is becoming increasingly uncertain, with major banks revising their forecasts. The digital mortgage conference is set to take place in September, and CMBS delinquencies have edged down. Ontario’s credit union assets have increased, and mortgage arrears have edged up slightly. The mortgage industry has seen new career moves, including Caroline Bacha joining Manulife Bank. These developments highlight the ongoing changes and trends in the Canadian mortgage market.
