On October 29, 2025, the Bank of Canada announced a 25-basis-point rate cut, lowering its key policy rate to 2.25%. This marks the second reduction in just over a month and reflects growing concern about a slowing economy, weaker job growth, and easing inflation pressures. The central bank said inflation has now remained within its target range of 2–3% for several months, giving policymakers room to support borrowing and spending. However, Governor Tiff Macklem signaled that this might be the last rate cut for some time, calling the new level “appropriate” for current conditions.

The move is expected to bring modest relief to mortgage holders, especially those with variable-rate loans and home equity lines of credit. Monthly payments for many borrowers will decrease slightly, as prime lending rates fall in response to the Bank of Canada’s move. For example, a homeowner with a $700,000 variable-rate mortgage could see their monthly payment drop by about $100, depending on their lender and amortization schedule. However, fixed mortgage rates—tied to longer-term bond yields—are likely to decline more gradually as markets adjust to the new policy stance.

In the Greater Toronto Area (GTA), the announcement has already sparked renewed optimism among prospective homebuyers. Real estate brokers report an uptick in inquiries from first-time buyers who had been priced out when rates were higher. The cut is also expected to help developers and investors in the pre-construction condo market, where financing challenges have intensified this year. However, the overall affordability picture remains tough: despite easing rates, high home prices and rising living costs continue to limit purchasing power across much of the region.

Economists warn that the Bank of Canada’s latest move is not the beginning of an extended easing cycle. Policymakers remain cautious about over-stimulating the housing sector or fueling another surge in household debt. The message from Ottawa is one of balance — offering enough relief to prevent a deeper economic slowdown but stopping short of reigniting speculative real estate activity. Market analysts say the next few months will be crucial in determining whether lower borrowing costs translate into stronger home sales or merely stabilize the market at current levels.

For GTA homeowners and buyers, this rate cut provides a welcome pause after two years of sharp increases that strained household budgets and cooled property values. While the change is unlikely to spark a dramatic rebound, it may encourage some movement in both resale and new-home segments heading into the winter months. Ultimately, the rate drop represents a small but meaningful shift toward affordability, even as broader challenges — such as limited housing supply and high debt levels — continue to shape the GTA’s real estate landscape.