when will mortgage rates drop

Mortgage rates are expected to gradually drop throughout 2025. In Canada, major banks predict rate cuts of about 25 basis points each at the September and December Bank of Canada announcements, potentially bringing rates down to around 2.25% by the end of the year. The Bank of Canada’s policy rate has already decreased significantly in 2024, and further cuts in 2025 seem likely though gradual, aiming to support economic growth and keep inflation near target levels. In the U.S., mortgage rates have slightly decreased from over 7% at the start of 2025 to around 6.75%, but falling below 6% is not expected anytime soon. Experts suggest rates might dip below 6% around mid to late 2026, depending on economic conditions like higher unemployment or geopolitical events. A sustained period of lower bond yields could also encourage lower mortgage rates. In summary, borrowers in Canada might see mortgage rates drop gradually through the rest of 2025 to around 2.25%, while in the U.S., significant drops below 6% might not occur until mid to late 2026 at the earliest.