Interest Rate Announcement

The Bank of Canada (BoC) delivered its second consecutive cut to the key interest rate on Wednesday, lowering it by 25 basis points to 2.25%. The move, widely anticipated by markets, came as growing signs of economic weakness outweighed stronger employment data and a recent rise in inflation.

This latest cut could breathe new life into Canada’s housing market, particularly in areas where demand has cooled in recent months. Lower borrowing costs typically make mortgages more affordable, encouraging more buyers to re-enter the market.

For those who’ve been sitting on the sidelines, this is welcome news. As mortgage rates continue to ease, purchasing power improves — meaning buyers can potentially qualify for larger loans or secure better monthly payments. However, competition could pick up again if more buyers rush back into the market, especially for well-priced homes in desirable neighbourhoods.

Sellers may also benefit from renewed demand. A more active pool of buyers can lead to quicker sales and stronger offers, particularly for properties that show well and are priced competitively. That said, price growth is unlikely to surge overnight — many experts expect the market to stabilize gradually as confidence builds.

While another rate cut signals some relief for homeowners and buyers, it also highlights the underlying economic challenges that prompted the BoC to act. If the trend continues, the housing market could see a steadier pace of activity heading into the next few months — a welcome shift from the slower conditions seen earlier this year.

The Bank of Canada will make its next interest rate decision on January 28.