On April 10, families with mortgages got some bad news: The Bank of Canada announced its prime rate would remain at 5%.

We cannot afford any further inaction. It’s time for interest rates to fall.

Polls confirm what’s already obvious to anyone who talks to neighbours at the local store or parents at a kids’ hockey game. The cost of living, especially the cost of housing, is the top issue in the country, the one we most want governments to solve.

For most homeowners, the biggest factors affecting housing costs are the price they paid for their home, and the interest rate on their mortgage. Government can help with housing prices, mainly by getting new supply built through measures like easier planning, intensification especially near transit, freeing up unused government land, and supporting innovations like modular housing.

Mortgage cost is the other key barrier keeping many Canadians from buying their first homes. Even for families who already bought homes, housing cost depends on mortgage cost, driven by interest rates. When rates spiked after COVID, people with variable rate mortgages felt the pain immediately. But most Canadians choose fixed-rate mortgages, and nearly 80% now choose five-year terms.

Every month, more families have to renew mortgages that had locked in pre-pandemic rates. The Canada Mortgage and Housing Corporation (CMHC) estimated that 45% of mortgages were up for renewal in 2024 or 2025.

For families who are already struggling to make ends meet, the increase in payments can be hundreds or even thousands of dollars a month.

Some politicians seem puzzled that people are still concerned about the cost of living when the inflation rate has fallen. But families renewing their mortgages feel like their finances were hit by a truck. National averages are cold comfort to parents facing a sudden, sharp drop in their standard of living, and wondering whether they can afford to send the kids to camp this year.

Fortunately, averages do matter for national policy, and inflation really has come down, to 2.8% in February, inside the Bank of Canada’s 1-3% target range.

Mortgage and rental costs are among the reasons inflation has not fallen even further, but interest rates themselves are a major reason these are so high. Even troubling economic news, like unemployment rising to 6.1%, actually strengthens the case for lower rates.

The Bank of Canada will have another chance to cut interest rates in June, and it should. Along with that, the federal government can take steps to ease financing.

The government recently announced that it will allow 30-year mortgages, as OREA has long advocated, but it narrowly restricted these to first-time buyers of new homes. It should allow them for all, and should increase the $1-million cap on insured mortgages.

Even as the government tries to advance a pro-housing agenda, its own agencies too often do the opposite. The Office for the Superintendent of Financial Institutions tightened capital requirements for banks, making it harder to lend for home building. CMHC has been adrift, without permanent leadership or a clear mission. We cannot afford different parts of government working at cross purposes on housing.

Canadians are right that the cost of living, including the cost of renewing mortgages, must come down. An interest rate cut in June should be the first step.

— Tim Hudak is the CEO of the Ontario Real Estate Association (OREA)