*BREAKING* Bank of Canada Lowers Rates Again to 2.25%!
*BREAKING* Bank of Canada Lowers Rates Again to 2.25%!
Date Posted: October 29, 2025
The Bank of Canada just lowered its overnight rate by 0.25%, bringing it down to 2.25%. That means the prime rate—which most lenders base their variable mortgage rates on—will likely follow and decrease slightly too.
So what does that mean for you and your mortgage? Let’s break it down.
A Quick Recap: Why the Bank Made This Move
The Bank of Canada decided to cut rates because our economy has clearly slowed down.
Exports are weaker, business investment is lagging, and unemployment has climbed to 7.1%. Inflation, however, has cooled back toward the Bank’s 2% target—landing at 2.4% in September—which gives the Bank some room to provide a little relief.
In simple terms: the economy is soft, inflation is steady, and the Bank wants to support growth without letting prices rise too quickly.
For Variable-Rate Mortgage Holders
Good news — this rate cut should give you a bit of breathing room.
When the Bank of Canada lowers its rate, the banks usually follow by dropping their prime rate. That means:
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If you have a variable-rate mortgage with a floating payment, your monthly payment could drop slightly.
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If you have a fixed-payment variable mortgage, your payment may stay the same, but more of it will now go toward your principal instead of interest.
Even a 0.25% cut can save you roughly $14–$50 per month for every $100,000 borrowed, depending on your lender and term.
It’s not a massive change—but it’s a welcome one.
For Fixed-Rate Mortgage Holders
Fixed rates are tied more to bond yields than to the Bank of Canada’s policy rate, so they don’t move in perfect sync.
However, a rate cut often nudges bond yields lower over time, which can lead to slightly more competitive fixed-rate offers—especially for those coming up for renewal soon.
If your mortgage is renewing within the next 6–12 months, this is the perfect time to start watching rates (or reach out to me to review your options).
For First-Time Buyers
A lower rate environment can make qualifying a bit easier and monthly payments a bit lower—but affordability is still tight.
If you’ve been sitting on the sidelines waiting for rates to start easing, this is a good time to get pre-approved and understand where you stand. A small rate drop can make a difference in your qualifying amount and your long-term costs.
Looking Ahead
The Bank signaled that this rate is “about the right level” for now, but they’ll continue to monitor how inflation and growth evolve.
If inflation stays close to 2% and the economy remains soft, we could see another small rate cut in the coming months. That said, global uncertainty—especially from U.S. trade policies—means the Bank is moving cautiously.
Bottom Line
This rate cut is a positive step for mortgage holders.
It won’t drastically change the market overnight, but it’s a sign that borrowing costs are slowly easing—and that relief could continue into 2026.
If you have a mortgage coming up for renewal or are thinking about making a move, let’s talk about how this change could impact your payments, your options, and your overall strategy.