10/29/2025
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Posted in Mortgages and Real Estate by Vanguard Realty | Back to Main Blog Page
The Bank of Canada’s latest 25-basis-point rate cut, dropping the overnight rate to 2.25%, has delivered a modest dose of relief to variable-rate borrowers and homeowners.
However, according to industry experts, the move is unlikely to spark a rapid turnaround in Canada’s housing market, as economic uncertainty and stricter lending standards continue to weigh on buyer sentiment.
Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert, said the cut was a welcome step for borrowers but cautioned against expecting immediate market transformation.
“The rate cut is a positive step, but it won’t transform the market overnight,” Zlatkin said.
“It slightly improves affordability and may prompt more buyers to start exploring their options, but many households are still dealing with job uncertainty. With unemployment at a high level, some Canadians simply weren’t in a position to take on new debt right now.”
Lenders, too, have responded with increased scrutiny. “Files are being reviewed more closely, and appraisals are being double-checked to make sure property values reflect current market conditions,” Zlatkin said.
“Lenders want to feel confident that borrowers can manage their payments before approving a mortgage. For buyers, it’s a reminder to stay realistic about pricing, since paying above market value can create challenges during the financing process.”
Borrowers are also adjusting their strategies. “Most clients are choosing three-year fixed rates because they offer predictability with the flexibility to renew sooner if rates continue to move lower,” Zlatkin said.
“Variable rates still weren’t low enough to make the risk worthwhile. For landlords, fixed terms remained the preferred choice, since stable payments are crucial for managing rental income.”
Home price trends and buyer leverage
Victor Tran, mortgage and real estate expert at Rates.ca, noted that while the rate cut was “welcome news for floating variable rate mortgage holders, homeowners up for renewal in the coming months and some would-be homebuyers, it may not be enough to spur significant movement in the housing market.”
Tran pointed to factors like the high cost of living, return-to-office mandates, and job market concerns as ongoing headwinds.
“In many regions, we’ve seen housing price declines of 10 to 20 percent, but those prices are still expensive for many as income levels haven’t kept pace with initial housing price increases,” Tran said.
“That said, for those that are able to purchase now, conditions are favorable for buyers. Especially those that plan to live in the home for the foreseeable future.”
Tran also highlighted that softening prices and increased supply have given buyers more leverage, allowing for conditional offers and more time to make decisions. Fixed mortgage rates have edged down, with some insured rates now in the high threes, though these often come with restrictions.
Looking ahead: Opportunities and caution
Both experts urged buyers to take advantage of available government programs and to lock in rate approvals, while remaining vigilant for further changes.
“With another overnight rate announcement coming in December, it’s possible that rates will decline further,” Tran said.
“Don’t rely on the lender to adjust rate holds if rates change. Keeping an eye on the market and proactively asking for adjustments can save you money.”
The takeaway: While the Bank of Canada’s rate cut has eased some pressure, the path to a more robust housing market recovery will likely be gradual, shaped by broader economic forces and evolving lending practices.
Source: Canadian Mortgage Professional
Bank of Canada, Canadian Housing Market, Interest Rate Forecast, Interest Rates
