After a few turbulent years in the mortgage world, homeowners and buyers in Nanaimo are looking ahead to 2025 with curiosity. Will rates finally drop to more manageable levels? Can variable rates make a comeback? And what does the real estate market hold for those looking to buy or renew?
Our Nowik Mortgage team of experts shares market predictions for 2025 and whether or not now is the time to secure the best mortgage rates in Nanaimo or not.
Variable Mortgage Rates & Fixed Rates
Historically, variable mortgage rates have been lower than fixed rates, but that changed dramatically in recent years. The Bank of Canada (BoC) slashed rates to a record-low 0.25% in 2020, sparking a surge in variable-rate mortgage approvals. However, rapid rate hikes between 2022 and 2023 reversed this trend, causing many borrowers to avoid variable-rate options.
Now, as the BoC continues its rate-cutting cycle, variable rates are expected to regain their edge. Since June 2024, the central bank has already cut borrowing rates by 175 basis points, bringing the benchmark rate down to 3.25%. If economists’ predictions hold true, further reductions in 2025 could bring five-year variable mortgage rates down to around 3.6%—making them more appealing than fixed rates for the first time in years.
Short-Term Fixed Mortgages
In uncertain markets, homeowners often gravitate toward five-year fixed-rate mortgages for stability. However, with mortgage rates expected to continue declining, many borrowers are opting for shorter-term fixed-rate options instead.
Data from the Canadian Mortgage and Housing Corporation (CMHC) reveals that as of mid-2024, fixed mortgages with terms between three and five years made up 56% of all new mortgages. This shift allows homeowners to benefit from the security of a fixed rate while keeping their options open for future reductions.
Mortgage Renewals
If your mortgage renewal is coming up in 2025, you could be in for some great news. Over 1.2 million fixed-rate borrowers, holding $300 billion in loans, are expected to renew this year. With so many mortgages up for grabs, lenders are set to compete aggressively to keep or gain customers.
Recent regulatory changes have also made it easier for borrowers to switch lenders without passing the stress test again. This means you have more flexibility to shop around for better rates. With banks eager to secure your business, we recommend chatting with us about comparing offers carefully before signing any renewal agreement.
Home Buying Demand
The Canadian real estate market saw a slow 2024, but demand is picking up. Thanks to lower interest rates and more affordable borrowing conditions, the Canadian Real Estate Association predicts a 6.6% increase in home sales in 2025.
Additionally, new mortgage policies are making it easier for first-time buyers to enter the market. Changes include longer 30-year amortisations for first-time buyers and relaxed down payment rules on insured mortgages. These adjustments will help more people secure financing and make homeownership more attainable.
Mortgage Renewal Payments
Many homeowners who locked in low mortgage rates between 2020 and 2022 have been worried about the so-called “renewal wall.” However, with interest rates starting to ease, the anticipated spike in monthly mortgage payments may not be as severe as initially feared.
In fact, TD Economics predicts that overall mortgage payments will decline by about 1.2% in 2025. While some homeowners will still see increases, the reductions in variable and shorter-term fixed rates will provide relief.
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