BoC holds rates steady in June: Here’s 7 smart money moves to take control of your finances and thrive in uncertain times

1. Glimmer of hope for first-time homebuyers

Since March 2022, the Bank of Canada’s policy rate peaked at 5.00%. While several rate cuts since late 2024 have offered relief, the central bank’s decision to hold the policy rate steady at 2.75% in both April and June signals a pause in easing. For first-time homebuyers, borrowing costs remain lower than a year ago, offering some continued affordability relief — but further rate drops may not come as quickly as many hoped.

For instance, someone holding a $500,000 variable-rate mortgage that dropped from 5.20% to around 4.45% earlier this year is still saving roughly $77 per month — about $924 annually — compared to peak-rate levels.

That said, affordability challenges remain steep in high-priced markets like Toronto and Vancouver, where a $500,000 mortgage covers only a fraction of a typical first-time purchase. Buyers in mid-sized cities such as Ottawa or Halifax are better positioned to take advantage of today’s stabilized, lower-rate environment.

Bottom Line: The pause in rate cuts means buyers can still benefit from lower borrowing costs, but the window for deeper discounts may be closing. With market confidence firming and competition heating up, especially in the spring market, any demand surge could put renewed pressure on home prices.

Shop Competitively: Find the lowest mortgage rate in this uncertain economic environment.

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2. Relief for variable-rate mortgage holders

Variable-rate mortgage holders won’t see new savings from the Bank of Canada’s latest announcement, as the central bank opted to keep its key rate unchanged at 2.75%. Still, they continue to benefit from earlier rate cuts, since the prime rate — which lenders use to set variable rates — remains well below 2024 highs.

For example, a $400,000 mortgage that had dropped from 5.20% to 4.95% earlier in the year still saves homeowners about $61 a month, or roughly $736 annually. Some lenders keep monthly payments fixed and instead accelerate principal repayment, which helps reduce long-term interest costs.

That said, variable-rate mortgage holders should stay alert. The Bank’s rate pause reflects ongoing inflation and trade uncertainties — and while future cuts are still on the table for later in 2025, so are potential surprises. It's wise to remain flexible and maintain a financial buffer for rate shifts.

Bottom Line: While no new relief is coming immediately, borrowers with variable rates continue to save compared to peak-rate periods — and in some cases, they’re paying off their loans faster.

3. Renewing mortgages still pose challenges

Even with interest rates holding steady, Canadians renewing fixed-rate mortgages this year will still face higher borrowing costs compared to the ultra-low rates locked in during 2020. As of June 2025, renewal rates for fixed mortgages range from 3.99% to 5.69%, depending on factors like term length, lender and borrower credit profile. While not as punishing as peak 2023 levels, the current environment still represents a meaningful jump for those coming off sub-2% rates.

Homeowners nearing renewal should use mortgage calculators to assess monthly payment changes and explore both fixed and variable options. With rates now in a holding pattern — and no clear signal yet on when further cuts might come — locking in a competitive rate now could offer peace of mind in an uncertain bond market.

The key is to shop aggressively. Fixed rates remain sensitive to inflation data and global trade tensions, so using a rate comparison tool like the Nesto rate finder can help you stay ahead of sudden market shifts and avoid overpaying.

Bottom Line: Renewing your mortgage in 2025 means facing higher rates than you may be used to — but with careful planning and smart comparisons, you can still find manageable terms.

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4. Cost on large purchases remains the same

Borrowers seeking personal loans, auto loans or lines of credit tied to the prime rate won’t see new rate relief following the Bank of Canada’s decision to hold steady. However, they’re still benefiting from earlier rate cuts, which have kept borrowing costs below last year’s highs. For example, a $30,000 car loan with a variable APR tied to prime may still sit around 6.95%, compared to 7.20% in late 2024 — saving borrowers roughly $150 annually in interest.

Bottom Line: While the latest rate decision won’t lower costs further, current borrowing conditions remain more favorable than a year ago — and that could help support spending on major purchases.

5. No additional relief for businesses

Businesses benefit from easier access to lower-cost credit, aiding expansion efforts. Unfortunately, holding rates doesn't mean access to lower credit for businsesses, but it may help increase consumer spending which boosts demand for goods and services.

Bottom Line: Businesses need to consider how to maximize profits and reduce borrowing costs.

6. No additional increase in disposable income for Canadians

With interest rates holding steady, debt-servicing costs for Canadians remain lower than they were at the peak — but no longer declining. Borrowers with variable-rate loans or lines of credit tied to prime are still seeing savings compared to a year ago. For instance, a $50,000 line of credit that dropped from 7.20% to 6.95% earlier in 2025 continues to save about $125 per year in interest.

For borrowers with strong credit profiles, unsecured personal loan rates remain competitive, with some lenders offering rates around 6.45%. Those with fair to poor credit still face higher costs, but the cumulative effect of earlier rate cuts means there are more options under 8.00% — especially for those who take time to comparison shop.

Bottom Line: While rates aren’t falling further, many Canadians still benefit from lower borrowing costs than in 2023 — freeing up cash to save, invest, or accelerate debt repayment.

7. Inflationary risks remain

While previous rate cuts brought temporary relief to variable-rate borrowers, the BoC’s pause in April and again in June suggests that additional cuts may not come as quickly. Fixed and variable rates remain in flux, with economists split on whether the next move will come in July or September.

Although inflation cooled to 2.7% in March 2025, lingering supply chain disruptions and energy price volatility mean inflation risks are far from gone. The BoC remains cautious and could reverse cuts if price pressures rise again. The BoC will closely monitor inflation metrics and adjust rates if needed.

Bottom Line: Canadians should stay vigilant about inflation’s potential impact on living costs.

Conclusion

With the BoC holding its target rate in April and again in June, the central bank has promised to continue its efforts to boost economic recovery, while monitoring ongoing global uncertainty. For those Canadians in a position to pay down debt or to secure debt at a lower rate, now is a good time to lock in lower rates.