Here’s a comprehensive look at what the Bank of Canada’s recent interest rate cut to 2.25% means for buyers, why now is a great time to consider purchasing real estate, and the current average mortgage rates across Canada:

🏡 Why Now Is a Great Time to Buy Real Estate in Canada

The Bank of Canada’s decision to lower its overnight rate by 0.25% to 2.25% is part of a broader easing cycle aimed at stimulating the economy and making borrowing more affordable. Here's why this creates a favourable environment for buyers:

1. Lower Borrowing Costs

Variable-rate mortgages are directly tied to the Bank of Canada’s rate. When the rate drops, so do monthly payments for borrowers with variable-rate mortgages.
Fixed-rate mortgages may also decline gradually, as they’re influenced by bond yields, which tend to fall in response to rate cuts.

2. Increased Affordability

Lower rates mean higher purchasing power. Buyers can afford more home for the same monthly payment.
For example, a homeowner with a $676,000 mortgage could save around $87/month, or $1,044/year, due to the rate cut.

3. Pent-Up Demand

Many buyers have been waiting for rates to drop before entering the market. This cut may trigger a surge in activity, especially among first-time buyers4.

4. Market Conditions Favor Buyers

In Ontario and BC, listings are up and prices are softening, creating buyer-friendly conditions.
Sellers are more flexible, and conditional sales are rising, giving buyers more negotiating power.

📊 Current Average Mortgage Rates in Canada (October 2025)

🔁 Variable Rates

5-Year Variable (Insured): ~3.70%
5-Year Variable (Conventional): ~4.42%
3-Year Variable (Conventional): ~5.25%

📈 Fixed Rates

5-Year Fixed (Insured): ~3.69%
5-Year Fixed (Conventional): ~4.68%
3-Year Fixed (Insured): ~3.74%

Note: “Insured” rates apply to high-ratio mortgages (less than 20% down), while “conventional” rates apply to mortgages with 20% or more down. Actual rates depend on credit score, income, and lender terms.

💡 Final Thoughts

With rates trending downward and market conditions favouring buyers, fall 2025 presents a strategic window to enter the real estate market. Whether you're a first-time buyer or looking to upgrade, locking in a competitive rate now could yield long-term savings and stability.

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