Rate Update

Bank of Canada Cuts Rates Again, What It Means for Buyers & the Market

The Bank of Canada announced another 25-basis-point rate cut yesterday, bringing the overnight rate down to 2.25%, the lowest level we’ve seen since mid-2022. As a result, Canada’s prime rate will drop to 4.45% effective today.

This marks the second consecutive cut from the Bank, but based on today’s comments, it also sounds like it could be the last one for a while.

Why The Bank Cut Rates

Governor Tiff Macklem explained that the ongoing U.S. tariffs and global trade tensions have created more than a temporary slowdown, they’ve triggered a structural shift in the Canadian economy. Businesses are facing higher costs and uncertainty as they navigate new supply chains and trade relationships.

The Bank’s goal right now is to help support the economy through this transition while still keeping inflation close to 2%. Inflation has been stubborn around 2.5–3%, but it’s easing, giving the Bank some room to make this latest cut. The Bank also downgraded its growth forecast, it expects slower GDP growth through 2026, largely due to weaker exports and business investment from the trade fallout.

What Happens Next

Economists are calling today’s move the likely “final cut” of this cycle. Markets are pricing in only a 10% chance of another cut in December, and about a 35% chance for one in 2026.

At the same time, bond yields actually ticked up slightly after the announcement, which means fixed mortgage rates probably won’t drop further in the near term. In other words, we may have hit the floor for fixed rates for now.

What This Means for Real Estate

The Bank noted that there’s been a pickup in housing activity lately and that this cut will provide “more support” for residential investment. We’re likely to see an increase in market activity, but unevenly across regions.

For buyers, this change means:

· Variable-rate mortgages and HELOCs will adjust slightly lower (usually the day after the cut).

· Qualifying may become a bit easier since the stress test rate drops in tandem with prime.

· Fixed rates may hold steady for now, as they’re tied to bond yields, not directly to the Bank of Canada rate.

Overall, this is good news for anyone who’s been waiting for a bit of relief on borrowing costs, but it’s also a reminder that rates aren’t expected to drop much further.

This move from the Bank of Canada shows they’re trying to support a slowing economy without overdoing it. Rates have come down from their highs, but the Bank has made it clear that this is likely the end of the easing cycle, at least for now.

For real estate, this could keep buyer confidence steady and give the market a small push, especially heading into the winter months. But overall, we’re entering a period of stability rather than big swings, a welcome change after the rate rollercoaster of the past

few years.