Mortgage Payment Calculator Canada

June 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.

• Real estate update: Canada’s housing market showed signs of revival in May 2025. According to the Canadian Real Estate Association (CREA), national home sales rose 3.6% month over month to 49,423 units — the first monthly increase since November 2024. While sales remained 4.3% below last year’s levels, it’s a notable improvement from April’s 9.8% annual dip, suggesting buyers may be gradually returning to the market. Supply also rose in May, with 109,077 new listings, an increase of 3.1% from April and 8% year over year. With sales and new supply moving in step on a monthly basis, the national sales-to-new listings ratio (SNLR) held steady at 47%, firmly within balanced territory. Active listings climbed to 201,880, increasing 13.2% from a year ago. Prices also leveled off. The national average home price rose slightly from April to $691,299, though it remained 1.8% below May 2024. CREA’s MLS Home Price Index was unchanged on a monthly basis, ending a three-month decline. This recent data shows early signs of stability, but CREA cautions that one month of improvement doesn’t signal a full market turnaround. In the short term, variable rates are expected to remain stable, while fixed rates may rise further, making it a good time for buyers to secure a rate hold or mortgage pre-approval.

Read more: Canadian home sales stabilize in May

• CPI update: Canada’s annual inflation rate remained at 1.7% in May 2025, unchanged from April, according to the latest Consumer Price Index (CPI) data from Statistics Canada. The steady headline figure reflects the continued deflationary effect of lower energy prices following the federal government’s carbon tax removal. Gasoline prices declined by 15.5% compared to May 2024, a slightly smaller drop than the 18.1% decrease recorded the month prior. Excluding energy, inflation came in at 2.7%, suggesting underlying price pressures. Food prices rose 3.4% annually, with groceries and restaurant meals each up 3.3%. Vehicle-related expenses were also notable: passenger vehicle prices climbed 3.2%, while auto insurance premiums surged by 8%. The shelter category contributed to the downward pressure on inflation. Shelter costs increased 3% year over year in May, compared to 3.4% in April. Rents rose 4.5%, down from 5.2% and mortgage interest costs also continued their descent, rising 6.2% year over year, down from 6.8% in April. This marks the 21st consecutive month of deceleration in mortgage interest costs. Core inflation measures – CPI-trim and CPI-median – both fell to 3%, down from 3.1% in April. Although this is a move in the right direction, it’s unlikely to trigger a rate cut at the Bank’s upcoming July 30th meeting. Policymakers are closely monitoring early signs of stress, such as a 1.3% drop in May’s flash manufacturing sales, ahead of next month’s decision.

Read more: May 2025 CPI remains stable at 1.7%

Highlights from the Bank of Canada’s June 4, 2025 announcement

On June 4, 2025, the Bank of Canada held its benchmark overnight lending rate at 2.75%. This is the second consecutive pause following seven rate cuts between June 2024 and March 2025, amounting to a total reduction of 225 basis points from a peak of 5%.

• The decision was influenced by a mix of rising inflationary pressures and ongoing trade uncertainty. headline inflation excluding taxes rose to 2.3%, above the Bank’s 2% target, and core inflation reached over 3%.
• With the overnight rate unchanged, the prime rate remains at 4.95%. This means no immediate change in borrowing costs for Canadians with variable-rate mortgages, HELOCs, or other prime-linked lending products.
• Fixed mortgage rates, which are driven by bond yields rather than the Bank’s policy rate, remain elevated. The Government of Canada’s 5-year bond yield continues to hover around 2.8%, limiting lenders’ ability to discount rates further. The lowest five-year fixed insured mortgage rate currently available is 3.84%.
• Returns on savings products like high-interest savings accounts and GICs also remain stable, offering consistent yields in a volatile economic climate.
• Looking ahead, the BoC is expected to cut rates by another 50 basis points before the end of 2025. However, the Bank remains cautious as it assesses the broader impact of tariffs on exports, business confidence, and household spending.

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.

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:

More mortgage calculators

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