Bank of Canada Cuts Key Rate to 2.25%, Signaling a Pause Ahead
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.
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Canada’s Inflation Ticks Up to 2.4 % in September, Undercutting BoC’s Rate-Cut Expectations
<p>Canada’s annual inflation rate rose to 2.4 % in September 2025, up from 1.9 % in August and slightly above what economists had anticipated. The increase was driven largely by a smaller-than-expected reduction in gasoline prices and a noticeable uptick in food and shelter costs. This marks the first time in several months that headline inflation has moved higher, interrupting the downward trend seen through much of the year.</p><p></p><p>Breaking down the numbers: gasoline prices, which had been declining year-over-year, fell less in September than they did in the same period a year ago, lessening their drag on headline inflation. Food prices climbed 3.8 % year-over-year, with grocery purchases seeing their highest rise since early 2024. Shelter costs also contributed, with rents up 4.8 %, adding continued pressure on households already facing affordability challenges.</p><p></p><p>Core inflation measures remain stubborn. The Bank of Canada’s preferred gauges — CPI-median and CPI-trim — were around 3.2 % and 3.1 %, respectively. This suggests that even though headline inflation appears moderate, underlying price pressures are still embedded across key sectors such as housing, insurance, and services.</p><p></p><p>The data has immediate implications for the Bank of Canada’s upcoming policy meeting on October 29. Markets had widely expected a 25-basis-point rate cut, which would have lowered the policy rate to around 2.25 %. However, the stronger-than-expected inflation reading has reduced those odds, as policymakers may now opt to wait for clearer evidence that inflation is sustainably moving toward the 2 % target before easing further.</p><p></p><p>For households and businesses, this could mean borrowing costs remain higher for longer than anticipated. Mortgage holders, particularly those with variable rates, may continue to feel pressure, while potential homebuyers could face tighter conditions heading into the winter housing season.</p><p></p><p>In summary, while inflation remains within the Bank of Canada’s 1 %-to-3 % control range, the unexpected rise highlights the delicate balance between supporting economic growth and preventing renewed price acceleration. The next few weeks of economic data will be crucial in determining whether the central bank stays the course or begins its long-anticipated rate-cutting cycle.</p>
Rate Cuts Spark Cautious Optimism in GTA Mortgage Market
<p>Toronto — Mortgage relief from the Bank of Canada’s recent easing is nudging nervous buyers back toward the Greater Toronto Area market, but affordability remains the defining constraint for many. In mid-September, the Bank trimmed its policy rate by 25 basis points to 2.50%, a move lenders say has already filtered into more competitive variable and short-term fixed mortgage offers.</p><p></p><p>That incremental easing has coincided with signs of renewed activity across the GTA: listings have tightened in some neighbourhoods while sales showed month-over-month gains in early October, leaving the average GTA home price hovering around the $1.05-million mark — still well above what many first-time buyers can comfortably finance. Market watchers say lower headline rates are helping, but the gap between incomes and local prices keeps weekly mortgage payments high for marginal buyers.</p><p></p><p>Lenders and brokers are watching two forces closely: how fast banks pass cuts through to borrowers, and whether bond markets keep supporting lower long-term rates. Several major Canadian lenders and forecasters expect further easing to 2.25% by late 2025, which would likely lower five-year fixed and variable rates modestly; however, labile global conditions and domestic data could cause those expectations to shift quickly. Borrowers weighing renewals or purchases are being urged to lock in competitive terms if they expect rates to reverse.</p><p></p><p>Policy experts caution that while rate cuts ease monthly payments, they don’t solve the underlying affordability problem in high-cost centres like Toronto — limited supply, strong immigration and high construction costs keep price pressure intact. CMHC’s recent supply and market reports underline that ground-oriented housing growth is only modest and that structural shortages in high-demand cities will continue to influence prices even as borrowing costs fall.</p><p></p><p>For prospective GTA buyers, the takeaway is pragmatic: easing rates improve purchasing power a bit, but many will still face tough down-payment and qualification hurdles. Mortgage brokers suggest shopping multiple lenders, considering longer amortizations carefully, and running scenarios for both further cuts and potential re-acceleration of rates — actions that can make the difference between a manageable mortgage and one that strains household finances.</p><p></p>