Mortgage Payment Calculator Canada

April 2025: Mortgage market update

2025 has been a relatively slow year for the Canadian housing market, with buyers hunkered down due to the uncertainty over new U.S. tariff threats. If you’re looking for a mortgage rate in Canada, read on for some key information.

• CPI update- Statistics Canada’s latest Consumer Price Index (CPI) report for March 2025 reveals that Canada’s annual inflation rate dropped to 2.3%, down from 2.6% in February. This unexpected slowdown came despite the conclusion of the winter GST tax holiday, which had temporarily reduced prices on food, alcohol, and children’s items. The decline in inflation was largely driven by lower gas and travel costs, with gasoline prices falling by 1.6% and air travel costs dropping 12% year-over-year. Travel tour prices also decreased by 4.7%. However, food prices continued to rise, with grocery store and restaurant costs both increasing by 3.2%. Shelter costs, another major contributor to inflation, rose moderately by 3.9% year-over-year, mainly driven by a 7.9% increase in mortgage interest costs. Despite remaining elevated, the interest costs decreased from the 9% rise in February and the 10.2% increase in January, reflecting the impact of the Bank of Canada’s rate cuts. Rent prices continued to climb, increasing by 5.1%. The softer-than-expected headline inflation could lead the Bank of Canada to cut interest rates during its upcoming meeting on April 16. However, core inflation measures such as the median and trim CPI remain elevated at 2.9% and 2.8%, respectively. 

Read more- March CPI comes in surprisingly low at 2.3%

• Real estate update: On April 15, 2025, the Canadian Real Estate Association (CREA) reported a sharp slowdown in home sales, with only 39,202 properties sold in March. This marks a 9.3% decline compared to March 2024 and a 4.3% drop from February. With this dip, home sales are now 20% lower than their peak in November 2024. CREA’s Senior Economist, Shaun Cathcart, noted that the market’s sluggishness has primarily been driven by fears of a trade conflict, with the economic consequences of such a conflict still to come. Although home prices have seen modest declines, a major market correction is not yet expected. The national average home price in March dropped 3.7% year-over-year to $678,331. Inventory levels increased by 13.1% year-over-year, with 86,953 properties coming to market in March, contributing to a more balanced housing market. This increase in inventory, combined with a slowdown in sales, brought the sales-to-new-listings ratio down to 45.9%, the lowest it has been since February 2009. CREA considers this ratio to indicate a balanced market, but the situation varies across Canada, with certain regions still experiencing tighter conditions and rising prices despite the national decline in sales.

Read more: Canadian March home sales fall to 16-year low as tariff fears persist

Canadian housing market forecast for 2025

CREA has revised its 2025 and 2026 housing market forecasts, adjusting expectations due to ongoing economic uncertainty. While CREA’s January forecast had anticipated a recovery in the housing market, the increasing risks from tariffs and broader economic fallout have caused a slowdown in home sales and price growth in some regions. For 2025, CREA now expects 482,673 residential properties to be sold, a significant downward revision from the previously predicted 8.6% growth. The national average home price is forecast to decrease slightly by 0.3%, to $687,898, which is $30,000 lower than previously estimated. For 2026, CREA anticipates a modest recovery, projecting a 2.9% increase in home sales to 496,487 units. However, sales are still expected to fall short of the half-million mark for the fourth consecutive year. The national average home price is projected to rise by 1.2%, reaching $696,074 in 2026.

Highlights from the Bank of Canada’s April 16, 2025 announcement

On April 16, 2025, the Bank of Canada (BoC) decided to maintain its benchmark overnight lending rate at 2.75%, halting what would have been the eighth consecutive rate cut. This decision comes after a cumulative 2.25% decrease from the previous high of 5%.

• The Bank’s decision to hold rates was primarily driven by ongoing inflationary pressures and the continued uncertainty surrounding tariffs. Although inflation slowed to 2.3% in March, it remains above the BoC’s 2% target, influencing the Bank's cautious approach.
• The rate hold means that the prime rate at most lenders will stay at 4.95%, meaning variable-rate mortgage holders will see no change to their rates. 
• Although fixed mortgage rates are not directly influenced by the BoC’s overnight rate, they have recently gone down as bond yields stabilized around 2.6%. The lowest available five-year fixed mortgage rate is currently 3.79%, with a slightly lower rate in Quebec at 3.74%.
• Variable-rate products, including personal loans, HELOCs, and lines of credit, will also maintain their current interest rates, providing stability for borrowers. 
• Looking ahead, the Bank of Canada’s outlook remains uncertain and future rate decisions will depend on how global trade disruptions and inflation evolve in the coming months.

How U.S. tariffs are influencing today’s mortgage rates

In April 2025, the U.S. shared details about its tariff policy, announcing a 50% reciprocal tariff on countries with U.S. trade surpluses and a 10% baseline tariff on all U.S. trading partners. While Canada is exempt from the reciprocal tariffs, it still faces the 25% tariff on non-CUSMA imports, steel, aluminum, and foreign cars and parts. 

These tariff actions have caused a sharp decline in bond yields. In Canada, the 5-year government bond yield fell to 2.488% on the morning of April 3, 2025. As a result, fixed mortgage rates are now at their lowest in years, with rates as low as 3.74% for insured mortgages and 3.99% for uninsured borrowers. This presents an opportunity for borrowers looking to lock in rates or renew their mortgages.

The Bank of Canada (BoC), initially expected to cut rates in response to the economic challenges, has instead decided to hold rates steady. The BoC is taking a cautious approach, monitoring global developments and potential impacts on the Canadian economy, but they are less likely to make drastic rate cuts for now.

Despite lower mortgage rates, the Canadian housing market is showing signs of slowing down. In February 2025, home sales dropped 10.4% compared to the previous year, and demand has cooled significantly. Buyers are becoming more hesitant due to ongoing uncertainty about the tariffs' impact on the economy. 

Also read: How could 25% US tariffs impact Canadian mortgage rates?

Why use a mortgage payment calculator?

When planning to buy a home, it's easy to focus on the final purchase price or your mortgage amount. But actually, the most relevant number to you will be your regular repayment. After all, your mortgage payments are the amount that you'll need to take from your paycheque each month.

What is a mortgage payment?

Your mortgage payment is the amount of money you must pay every month to pay down, and ultimately pay off, your mortgage loan. Your mortgage payment covers both the principal (the actual amount of the loan) and the interest on the loan. It can also include mortgage default insurance, also sometimes known as CMHC insurance (required when your down payment is less than 20% of the cost of your home), property taxes and other fees. When you first begin making payments, more of it goes towards covering interest, but over time, more of your payment will eventually go to paying down your mortgage balance.

Tip for first-time home buyers: GST exemption

Under Prime Minister Mark Carney’s GST exemption proposal, first-time home buyers could save up to $50,000 if they buy a $1-million newly-built home or a substantially renovated property. The Conservative Party has proposed a similar plan, which would apply to homes priced up to $1.3 million and wouldn’t be limited to first-time buyers.

The final form of this policy hinges on the outcome of the Federal Election on April 28, 2025, leaving some details in flux. 

Also read: Federal Liberals and Conservatives vow to remove GST on new home purchases

How do I get approved for a mortgage?

When thinking about your monthly mortgage payments, it’s also important to consider what you’ll need in order to get approved for a mortgage. Here are some of the most important things that prospective lenders will want to see: 

• A good credit score: You need a credit score of 680 or higher to qualify for the best mortgage rates that allow for the lowest monthly mortgage payments. To qualify for any mortgage at all, you’ll need a credit score of at least 560. Read more on how your credit score affects your ability to get approved for a mortgage.
• Proof of income: You’ll need to provide proof of income in the form of pay stubs and/or tax documents like your Notice of Assessment (NOA). If you recently started a new job, even with proof of income, many lenders will want to see that you’ve held the position for at least a year. 
• Ability to pass a mortgage stress test: You will need to pass a mortgage stress test, which ensures that you can still afford your mortgage payments at a rate known as the “qualifying rate”, set by the Office of the Superintendent of Financial Institutions (OSFI), or your contract rate + 2%, whichever is the higher of the two. 
• Down payment: The size of your down payment affects the house you can afford as well as the size of your mortgage and associated monthly payments. As well, it affects whether you will need to purchase mortgage default insurance, which is required if your down payment is less than 20% of the value of the home you are purchasing. The minimum down payment you’ll need to have depends on the home you’re looking to buy:

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For further information, check out these helpful pages!

• Best Mortgage Rates in Canada
• Variable or Fixed Mortgage Rates
• Amortization
• Mortgage Default Insurance (CMHC Insurance)
• Open vs. Closed Mortgage: What's the Difference?
• Mortgage Terms Glossary 
• Mortgages