The Bank of Canada (BoC) has cut its overnight lending rate for the seventh consecutive time, bringing it to 2.75%. This represents a full 225 basis point decrease since the central bank began its cutting cycle in June 2024.
But what does this rate cut actually mean for your mortgage here in the Fraser Valley? And is now the right time to buy, refinance, or make a change to your current mortgage strategy in Abbotsford, Chilliwack, Mission, or Langley? Let’s break it down.
Why Another Cut? Trade Tensions and Economic Uncertainty
The BoC’s decision comes amid growing economic uncertainty, primarily driven by ongoing U.S.-Canada trade tensions. While recent economic data showed stronger-than-expected GDP growth and stable inflation near the 2% target, the central bank is concerned about the “pervasive uncertainty created by continuously changing tariff policy.”
Though the threatened U.S. tariffs (25% on all Canadian imports and 10% on energy) haven’t yet been implemented, their looming presence has already caused significant ripples:
- Businesses are hesitant to invest and hire
- Consumer spending is dropping
- Credit is tightening for entrepreneurs
- Short-term inflation expectations are rising
BoC Governor Tiff Macklem emphasized that “monetary policy cannot offset the economic consequences of a protracted trade conflict.” Still, the central bank is doing what it can to cushion the potential blow.
The Direct Impact on Your Mortgage Rate
Variable-Rate Mortgages: Immediate Savings
If you have a variable-rate mortgage, you’re already winning! As a result of the BoC’s decision, major lenders have reduced their prime rates from 5.20% to 4.95%.
For borrowers with variable rates, this translates to:
- Adjustable-rate mortgages: Your monthly payments drop immediately
- Fixed-payment variable mortgages: More of each payment going toward principal rather than interest
Variable rates are now available at discounts of prime minus 0.85% for insured mortgages and 0.75% for uninsured mortgages. This brings the lowest variable rates to approximately 4.10% and 4.20%, respectively.
Fixed-Rate Mortgages: Getting More Competitive
While fixed mortgage rates don’t directly follow the BoC’s overnight rate, they’re influenced by bond yields, which have reacted to both the central bank’s decisions and the trade tensions. On March 3, Canada’s five-year government bond yield dropped to 2.5%, a low not seen since July 2022.
This has allowed lenders to offer very competitive fixed mortgage rates, with some insured five-year fixed terms now as low as 3.89%. Although yields have ticked up slightly since then, there’s still room for fixed rates to decrease further or maintain current discounts.
Your Potential Monthly Savings in the Fraser Valley
The 25-basis-point cut translates to real money staying in your pocket for Fraser Valley homeowners:
- For Abbotsford’s average home price of approximately $825,000: Monthly savings of about $96
- For Chilliwack’s average home price of approximately $710,000: Monthly savings of about $83
- For Mission’s average home price of approximately $780,000: Monthly savings of about $91
- For Langley’s average home price of approximately $950,000: Monthly savings of about $111
These calculations assume a 15% down payment for homes under $1 million and 20% for homes above $1 million, with a 25-year amortization period.
Fraser Valley Housing Market Outlook: Lower Rates But Cautious Buyers
Despite lower borrowing costs, the Fraser Valley housing market faces unique challenges. According to recent data from the Fraser Valley Real Estate Board, the region has seen more moderate sales activity in early 2025, with inventory levels increasing and price growth slowing.
The Fraser Valley market has traditionally been more resilient than larger urban centers like Vancouver, partly due to its relative affordability and growing popularity with families looking for more space. However, even our local markets in Abbotsford, Chilliwack, Mission, and Langley are feeling the effects of economic uncertainty.
As Leah Zlatkin, a mortgage broker at LowestRates.ca, noted: “The Bank of Canada’s rate cut is a positive step, but it’s not going to dramatically change the spring housing picture. Trade tensions and worries about a recession are making buyers hesitate.”
While this rate cut improves affordability and may bring some sidelined Fraser Valley buyers back into the market, significant activity is unlikely until tariff fears subside. This could present unique opportunities for prepared buyers to negotiate better deals in our local markets.
What’s Next for Your Mortgage Rate?
The million-dollar question: Will rates continue to fall? Economists are divided:
- TD Economics and Oxford Economics expect two more 25-bps cuts by June, bringing the overnight rate to 2.25%
- CIBC forecasts the same endpoint of 2.25% by June but warns that “a more protracted trade war could require even deeper cuts”
- BMO Economics takes a more aggressive stance, predicting three more quarter-point cuts, bringing the overnight rate to 2% by year-end
- RBC Economics emphasizes the uncertainty, noting that the BoC is “facing more than usual uncertainty”
The central bank is walking a tightrope—stimulating the economy while trying not to sacrifice progress on inflation, as tariffs and lower rates could push prices higher.
Your Best Mortgage Strategy Right Now
If You’re Shopping for a Home in the Fraser Valley
- Timing considerations: While affordability has improved with lower rates, the economic uncertainty might make it wise to get pre-approved now but remain flexible with your timeline. The Fraser Valley market tends to be less volatile than Vancouver, which could work in your favor
- Fixed vs. variable decision: The spread between fixed and variable rates has narrowed. Fixed rates offer stability in uncertain times, but variable rates provide immediate savings and could benefit further from additional cuts. For Fraser Valley properties, which generally offer better value than Vancouver, the savings can be significant
- Pre-approval advantage: Getting pre-approved locks in current rates for 90-120 days, giving you time to make a decision while rates are favorable. This is especially important in communities like Abbotsford and Langley where good properties can still move quickly
- Local market knowledge: Each Fraser Valley community has its own unique market conditions. Abbotsford differs from Chilliwack, which differs from Mission and Langley. Working with a local mortgage broker who understands these nuances is crucial
If You Currently Have a Mortgage in the Fraser Valley
- Variable-rate holders: You’re already benefiting from the cuts. Consider maintaining your previous payment amount to pay down principal faster. Fraser Valley homeowners can potentially save thousands over their mortgage term with this strategy
- Fixed-rate holders: If your rate is significantly higher than current offerings, calculate whether the penalty for breaking your mortgage is offset by potential savings from refinancing. With the relatively strong appreciation in Fraser Valley home values over the past few years, you might also have equity that can be leveraged
- Renewal coming up: If you’re within 6 months of renewal, start shopping now. Most lenders allow early renewal, and you can lock in current rates before any potential increases. This is especially important for Fraser Valley homeowners who may have purchased when rates were at historic lows
- First-time buyers who waited: If you held off buying in Abbotsford, Chilliwack, Mission, or Langley during the high-rate environment of 2023-2024, this rate cut cycle presents a potential opportunity to enter the market with improved affordability
If You’re Looking to Refinance in the Fraser Valley
With lower interest rates, this might be an ideal time for Fraser Valley homeowners to:
- Consolidate high-interest debt accumulated during inflation and high interest periods
- Access equity for renovations that add value to your Abbotsford, Chilliwack, Mission, or Langley property
- Consider a Purchase Plus Improvements Mortgage for needed renovations if you’re buying
- Add a revenue-generating basement suite, which is particularly valuable in our Fraser Valley communities where rental demand remains strong
- Restructure your financial situation for better cash flow in these uncertain economic times
Remember that refinancing comes with costs, including legal fees, appraisal fees, and potentially prepayment penalties if breaking a current mortgage term. Our team at Browne Mortgage can help you run the numbers specific to your Fraser Valley property to determine if it makes financial sense.
The Bigger Economic Picture
While lower interest rates benefit borrowers, they’re a symptom of broader economic concerns. The stock market has shown significant volatility, with CNN’s Fear & Greed Index indicating “extreme fear.” Investment advisors are suggesting that those who need to access investment funds within the next five years consider moving to safer havens like GICs or high-interest savings accounts.
For savers, unfortunately, the rate cuts mean diminishing returns on savings accounts and GICs. However, securing a competitive rate now might be smart before potential further decreases.
Let Us Help You Navigate These Changes in the Fraser Valley
The Bank of Canada’s seventh consecutive rate cut creates opportunities for Fraser Valley residents, but comes amid significant economic uncertainty. The full impact will depend largely on how the trade tensions with the U.S. evolve in the coming months.
Whether you’re a homeowner in Abbotsford, Chilliwack, Mission, or Langley with an existing mortgage, a potential buyer considering entering our local market, or someone looking to refinance your Fraser Valley property, these changing economic conditions require careful consideration.
At Browne Mortgage, we’ve been serving the Fraser Valley community for years, and we’re closely monitoring these developments with our local market expertise. We’re here to help you understand what these changes mean for your specific situation in our region.
Need help taking advantage of these lower rates in the Fraser Valley? Want to know if now is the right time to make a move in the Abbotsford, Chilliwack, Mission, or Langley markets? Contact the Browne Mortgage Team today at any of our convenient Fraser Valley locations for personalized advice tailored to your local situation.
