The Bank of Canada has raised its overnight rate to 5.00% today, July 12. This is a second consecutive quarter-point increase, so anyone carrying a variable-rate mortgage or arranging new financing should check the payment terms rather than relying on an older quote.
The policy settings
| Measure | Setting | Why it matters |
|---|---|---|
| Target overnight rate | 5.00% | Anchor for the Bank's monetary-policy stance |
| Change at this decision | 25-basis-point increase | Most direct signal for variable-rate borrowing |
| Bank Rate | 5.25% | Rate charged on one-day advances to financial institutions |
| Deposit rate | 5.00% | Rate paid on deposits held at the Bank |
Why the Bank makes this choice
Growth and jobs. Demand continues to run ahead of supply, consumption growth is strong and the housing market has shown fresh momentum even as the Bank expects growth to slow near 1% through the coming year.
Inflation. May CPI falls to 3.4%, but much of the improvement comes from energy; core inflation remains around 3.5% to 4% and the projected return to 2% moves to mid-2025.
The policy judgment. The Bank is adding to June’s quarter-point increase because demand is still running ahead of supply. Although headline CPI has fallen to 3.4%, much of that drop reflects energy prices; core inflation remains around 3.5% to 4%, and the Bank now projects a return to 2% in mid-2025.
What changes for borrowers
Variable-rate borrowers should expect lenders to translate the higher policy setting into prime-rate pricing. The immediate question is the payment rule in the mortgage contract: some payments move, while some remain fixed until a trigger threshold is reached.
A 25-basis-point change equals about $83 per month in simple interest on a $400,000 balance if the full change passes through. That is a scale marker, not a mortgage quote: amortization, payment structure, timing and lender terms change the actual result.
When comparing fixed and variable products, look beyond the starting rate. Payment structure, prepayment privileges, portability, penalties and conversion terms affect the cost of changing plans. Ask a lender or licensed mortgage professional to calculate the result for your balance and expected time in the home.
For Greater Sudbury buyers
For a Greater Sudbury purchase, I would have the lender or mortgage professional recalculate the payment and qualification limit at the offers available now. A second increase in two decisions makes an old pre-approval or assumed variable-rate payment a poor basis for an offer. Leave space for closing costs and repairs, then judge the property against recent relevant sales and competing homes instead of stretching to the top of an outdated ceiling.
- Refresh the pre-approval and confirm the rate-hold expiry.
- Test the payment at the offered rate and a higher renewal rate.
- Keep closing costs and a repair reserve separate from the down payment.
- Match financing and inspection conditions to the property’s actual risks.
For owners approaching renewal
A second increase in two meetings makes the renewal calculation worth doing again, even if you compared offers only a few weeks ago. I would request payment schedules for comparable terms and ask about penalties, prepayment options and portability. If a longer amortization is being proposed to ease the payment, check the added total interest as well as the monthly relief.
For sellers
A buyer who was comfortable with a June payment may need another financing check in July. I would price a Greater Sudbury listing against current competition and relevant sales, make condition and carrying costs clear, and pay close attention to qualified showing and offer feedback. The Bank’s decision affects the financing backdrop; it does not tell us the value of an individual home.
What to watch next
The key question now is whether demand and core inflation finally slow enough to justify a pause. The Bank expects the return to 2% inflation to take until mid-2025, so I would not build a purchase or renewal plan around a quick reversal. Use a payment that remains comfortable under more than one outcome.
Read the official Bank of Canada announcement.
For a local plan, explore the Buyer Experience or Seller Experience. You can also browse the Bank of Canada Decisions & Mortgage Rate Context Archive.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage