The Last Cut of 2025? Bank of Canada Reduces Policy Interest Rate to 2.25%
Thursday, November 13, 2025
By Matt Day for REALTOR.ca
The Bank of Canada dropped its policy interest rate from 2.5% to 2.25% on Wednesday, making it the second 25-point cut in a row, however it may be the last reduction we see for a while.
During the morning announcement on October 29, Bank of Canada Governor Tiff Macklem said the policy interest rate is now “about the right level to keep inflation close to 2%, while helping the economy through this period of structural adjustment.”
Let’s go over what this means for Canadian homeowners, buyers, sellers and those interested in real estate.
A lower interest rate may attract more Canadian home buyers
We’ve come a long way from the 5% key interest rate days of early 2024. This is welcome news for those currently on variable mortgages as their regular payment amount will drop almost immediately (or more of each payment will go toward their principal, rather than interest).
“While mortgage rates remain above their pandemic lows, the Bank’s recent rate cut is easing pressure on borrowers,” said Phil Soper, President and CEO of Royal Lepage. “Rates are once again in the threes—a level that feels supportive by the standards of the past two decades.”
Right now, you can qualify for a rate as low as 3.79%.
Many Canadian real estate markets have become more active after a sluggish spring selling season. Up until September, home sales had increased for six straight months as potential buyers started to come off the sidelines, and lower interest rates played a factor there. The Canadian Real Estate Association (CREA) is also forecasting a strong finish to the year when it comes to home sales, citing lower interest rates, rising inventories and more market balance throughout the country.
Compared to data from six months ago national home sales are up more than 10%. CREA’s Senior Economist Shaun Cathcart says, overall, home sales are at a good level right now and that things will continue to “move in the right direction” into next year.
“With three years of pent-up demand still out there and more normal interest rates finally here, the forecast continues to be for further upward momentum in home sales over the final quarter of the year and into 2026,” Cathcart is quoted as saying.
What aspiring home buyers need to know about the Bank of Canada’s rate announcement
Lower interest rates lift affordability in two ways:
• For a given income, the amount of mortgage you qualify for can rise (because interest costs are lower).
• Monthly payments drop (or growth in payments slows), which reduces stress for buyers.
For instance, if you have a $500,000 mortgage over 25 years on a variable rate, your monthly payment could go down around $90.
For fixed-rate buyers, the effect is more indirect. While the Bank of Canada’s cut doesn’t directly affect your fixed rate, it tends to help reduce fixed-rate borrowing costs over time at renewal (via lower bond yields and lender competition).
Where will interest rates go next?
There remains a lot of negative consumer confidence out there. Canadians remain concerned about the state of the economy and their own job security.
Since the Bank of Canada is nearing the low-end of its neutral range, there isn’t much wiggle room for more cuts. Should the economy further stumble or enter a recession, policymakers would be put into a tough spot.
The Bank of Canada will make its final interest rate announcement for the year on December 10.
Have you thought about buying, selling or both this year but are not sure if now is the right time to do it? Call me and I’ll let you know what’s happening with the current market and based on your individual situation, let you know if you should buy and/or sell now, or wait.
However, if you are definitely going to be buying and/or selling in the next little while, please reach out. There is over 100 years of experience on The Brian Kondo Real Estate Team. With our proven Home Selling System, we help our clients sell their home fast, for top dollar, using our experience to make it a smooth and pleasant experience. Using our exclusive Home Buying System, we help our clients purchase the home of their dreams!
To find out more, please call me at 905-683-7800. You can also email me: brian@briankondo.com
Thanks For Reading Today’s BLOG!
If you would like to see any of my previous blog posts, please click here.
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
Matt Day's article above was initially published on Realtor.ca. You can find it by clicking here.
| REALTOR.ca is the most popular and most trusted real estate website in Canada. Owned and operated by the Canadian Real Estate Association (CREA), REALTOR.ca provides up-to-date and reliable information that makes finding your dream property easy and enjoyable. REALTOR.ca is popular with sellers, buyers, and renters and is accessible online and on mobile devices. |
|
Matt Day |
About the Author Matt Day is the Community Manager for REALTOR.ca. Matt strategizes and creates engaging content for REALTOR.ca's online communities, including social media and Living Room blog articles. You can also find him at local concerts, playing Keepy Uppy with his kids, or on Strava where he claims he's a Local Legend for multiple biking segments. |
Homesellers - Find Out What Homes in Your Neighbourhood are Selling For! You can receive a FREE computerized printout of ALL recent Home Sales and Current Listings in your neighbourhood. Click here!
Best Buy Hotlist - You can receive a FREE list of the 10 Best Buys in your
specific price range sent to you at No COST or OBLIGATION.
Click here!
Your Home Sold Guaranteed or I'll Buy It!* No Gimmicks! For a Free Special Report that Details my Guaranteed Sale Program, visit: www.BriansGuaranteedSaleProgram.com.
Remember, your referrals change lives! We donate a portion of our income on every home sale to a great worthy cause like SickKids Hospital. To find out more visit: www.ReferForSickKids.com.
If you or anyone you know is considering making a move in the next little while, give me a call or pass on my number ... 905-683-7800 (Office) or 905-426-7484 (Direct).
#CanadaRateCut2025 #BoCInterest2_25 #CanadianMortgageShift #HomeBuyingCanada2025 #RealEstateRatesCanada #CanadianHousingShift #MortgageReliefCanada #HomebuyersCanada2025 #CanadaHomeMarketAlert #InterestRatesCanada #CanadianHomeAffordability
