On September 17, 2025, the Bank of Canada (BoC) lowered its key interest rate to 2.5%, marking the first cut after three consecutive holds.
While it might sound like just another financial headline, interest rate decisions like this ripple through nearly every corner of our economy, especially real estate. Whether you’re planning to buy your first home, move up to a larger space, downsize, or refinance, understanding what this change means can help you make informed, confident decisions.
A Quick Look at the Numbers
- Key policy rate: cut from 2.75% to 2.5%
- Bank rate: lowered from 3% to 2.75%
- Deposit rate: now 2.45%
The BoC explained that with slower economic growth and less upward pressure on inflation, it was time to stimulate the economy by making borrowing more affordable. After holding rates steady since March, this marks a significant policy shift designed to encourage consumer spending and business investment.
How Lower Rates Affect the Housing Market
Lower interest rates can create real opportunities for both buyers and sellers. Here’s how:
- Increased Affordability: As borrowing costs drop, mortgage lenders typically follow suit by reducing their rates. Lower mortgage rates mean lower monthly payments, and can increase the amount you qualify to borrow.
- More Buyer Activity: When mortgages become more affordable, more buyers tend to enter the market, which can boost competition and demand. This often helps support or stabilize home prices.
- Refinancing Potential: Homeowners with existing mortgages might find this an ideal time to refinance at a lower rate, potentially saving thousands over the life of their loan.
- Improved Market Confidence: When buyers see rates coming down, they often feel more confident making a move especially after months of uncertainty.
It’s important to remember that real estate is hyper-local. While national trends set the tone, market activity in our own community will depend on local supply, demand, and buyer sentiment.
A Measured Approach from the BoC
The Bank of Canada has been clear that it is “proceeding carefully”. While this cut is designed to support growth, global trade uncertainties and inflation trends are still on their radar.
The next interest rate announcement is scheduled for October 29, 2025, and the BoC has signaled it will be watching economic data closely before making any further moves. That means this is a window of opportunity, but not necessarily a permanent shift being proactive matters.
What This Means for You
If you’ve been thinking about making a move, this rate cut could be the spark that shifts the market in your favour. Even a modest decrease in interest rates can make a significant difference in your:
- Mortgage pre-approval amount
- Monthly carrying costs
- Long-term investment strategy
As your local real estate advisor, my role is to help you interpret these changes and decide what makes the most sense for your goals whether that’s buying your first home, upgrading to your forever home, or selling to unlock equity. I also work closely with trusted mortgage professionals who can help you explore your financing options in light of these rate changes.
Let’s Talk About Your Next Move
Navigating today’s market doesn’t have to be overwhelming, especially with the right guidance. If you’re wondering how this rate cut could impact your buying power, selling strategy, or refinancing opportunities, I’d be happy to walk you through it.
Real estate is never one-size-fits-all, and decisions are always easier with a clear plan. Let’s connect to talk about your next move, backed by insight, strategy, and your best interests at heart.
