In this episode of the Wisdom Lifestyle Money Show, host Scott Dillingham shares insights on navigating mortgage interest rates amid economic uncertainty. Recorded in June 2023 during a period of rising rates, Scott discusses common investor dilemmas: whether to lock into shorter 2- or 3-year fixed terms anticipating future drops or opt for a 5-year fixed for immediate stability. He cautions against trying to "time the market," emphasizing that shorter terms often carry higher rates—typically 1 to 1.5% more than 5-year options at the time—potentially leading to overpayments without substantial future savings. Drawing from conversations with lenders, Scott notes that any rate reductions would likely be gradual, not drastic like during COVID or the 2008 recession, making aggressive gambles risky.
Fast-forward to November 2025, the landscape has shifted significantly. The Bank of Canada has steadily cut its overnight rate from a high of 5% in mid-2024 to 2.25% as of October 29, 2025, signaling a potential pause in further reductions. Current mortgage rates reflect this: 5-year fixed options average around 3.79% to 4.19%, while variables sit at about 3.45%. Canada's economy, which met technical recession criteria on paper in 2023, has shown resilience in 2025, avoiding a full downturn despite sluggish growth and a GDP contraction in August. Projections indicate modest GDP growth of 0.6% to 1.1% for the year, with risks lingering into 2026 due to factors like trade uncertainties. Scott's advice remains relevant: prioritize current cash flow and qualification potential over speculative bets on rate drops.
Scott advocates for decisions based on today's needs, highlighting how lower fixed rates can improve stress tests and enable portfolio expansion. For those betting on further declines, he recommends variables for automatic adjustments and the flexibility to convert to fixed anytime. This episode provides timeless strategies for real estate investors, blending 2023 perspectives with updated 2025 realities to help avoid costly mistakes in a volatile market.
Key Takeaways
- Avoid Timing the Market: Shorter 2- or 3-year fixed terms often have rates 1-1.5% higher than 5-year options, risking overpayments unless future drops are drastic—unlikely based on lender forecasts.
- 5-Year Fixed for Stability: Choose longer terms for lower current payments, better cash flow, and easier qualification under stress tests, ideal for growing investment portfolios.
- Variable Rates for Flexibility: If expecting declines, variables adjust automatically and can be converted to fixed, allowing immediate benefits without locking in prematurely.
- Economic Context Update 2025: Bank of Canada rate at 2.25% after cuts; economy avoided full recession with slow growth projected at 0.6-1.1%, but risks remain for 2026.
- Focus on Today's Needs: Ignore future unknowns; lower rates now support higher borrowing power and reduce overpayment risks in uncertain environments.
- Investor Mindset: Calculate total interest costs carefully—gambling on big drops could lead to higher overall expenses and limited portfolio growth.
Links to Show References
- LendCity Mortgages (for Pre-Approvals): lendcity.ca
- Wisdom Lifestyle Money Show: Search on major podcast platforms or visit LendCity for episodes
- Bank of Canada Updates: bankofcanada.ca
- (00:03) - Introduction to Interest Rates
- (02:20) - The Current Economic Climate
- (06:33) - Flawed Thinking in Rate Predictions
- (08:26) - Understanding Long-Term vs Short-Term Strategies
- (10:00) - Choosing Between Fixed and Variable Rates
- (12:19) - Investor Strategies and Growth Plans
- (12:46) - Conclusion and Call for Feedback
Here are the top three ways I can help you:
- Gain Access To Your Weekly Investor Insight
- Book A Strategy Call With An Expert On The Team
- Access Our Investor Resources
Please follow and Rate us 5 stars because it helps us so much!