The Bank of Canada has lowered its policy interest rate by 25 basis points, bringing it down to 2.25%. This move aims to support the Canadian economy amid slower growth, easing inflation, and uncertainty in global trade.
But what does this mean for home buyers and sellers across Canada?
For Home Buyers: More Breathing Room Ahead
This rate cut is welcome news for many Canadians looking to buy a home or renew their mortgage. Here’s why:
💰 Lower Borrowing Costs
When the Bank of Canada cuts its policy rate, commercial banks usually follow by reducing their prime lending rates. This means lower interest rates on variable-rate mortgages, lines of credit, and loans. Buyers can qualify for slightly higher loan amounts or enjoy reduced monthly payments.
📉 Improved Affordability
With affordability still a major concern, even a small drop in rates can make a meaningful difference in buyers’ purchasing power. It could encourage more first-time buyers and move-up buyers to re-enter the market, especially if they were waiting for conditions to stabilize.
⏳ Opportunity Window
If inflation stays near the Bank’s 2% target, rates could remain steady for a while — giving buyers time to lock in financing at more favorable terms before any potential rate adjustments in 2026.
For Home Sellers: A Gradual Boost in Market Activity
While sellers have faced a quieter market in recent months, this policy shift could help reignite buyer confidence.
📈 Renewed Demand
Lower rates can bring more qualified buyers into the market, especially those who were previously priced out. This can lead to increased showing activity and stronger offers, particularly for well-priced and move-in-ready homes.
💬 Price Stability
With improved buyer sentiment, home prices could begin to stabilize in areas that saw slower sales activity. However, recovery may vary depending on local inventory levels and housing supply.
🏡 Timing Considerations
If you’re planning to sell, the months following a rate cut can be an advantageous time — before competition rises again as more listings come on the market.
What’s Behind the Rate Cut
The Bank made this decision amid clear signs of economic slowdown:
🇨🇦 Canada’s GDP contracted by 1.6% in Q2 2025
💼 The unemployment rate remained at 7.1%
💸 Inflation eased to 2.4%, near the Bank’s target
These indicators suggest that while the economy remains soft, lower rates may help stimulate growth without fueling inflation.
What to Expect Next
The next rate announcement is scheduled for December 10, 2025, and the Bank’s next Monetary Policy Report will be released on January 28, 2026.
Experts expect the Bank to hold rates steady if inflation stays near 2% — giving the housing market a window of stability through the end of the year.
Bottom Line
✅ Buyers: Enjoy a little more affordability and flexibility — but act strategically.
🏡 Sellers: Expect gradual improvement in demand as lower rates boost buyer confidence.
📊 Overall: The market is entering a phase of cautious optimism, with opportunities for both sides to make smart moves.
Thinking About Buying or Selling?
If you’re considering a move, now’s the time to understand how this rate cut impacts your goals.
Whether you’re buying your first home or planning to list your property, we can help you navigate the changing market.
📩 Contact me today to discuss your next steps in this evolving market.
Contact:
Murtaza Siddiqui
Broker at RE/MAX Hallmark Realty Group
Email: [email protected]
Phone: (613) 805-1111
