Bank of Canada Cuts Rates: Opportunity for Buyers Across Canada

 

On September 17, 2025, the Bank of Canada lowered its target overnight rate by

25 basis points (0.25%) to 2.50%, with the Bank Rate at 2.75% and the deposit

rate now 2.45%. Bank of Canada

 

This is the central bank’s first rate cut in six months and marks the policy rate’s

lowest level in three years. It comes in response to a cooling labour market,

slowing economic growth, and easing inflation pressures.

 

Here’s what this means for prospective home buyers — and how you can use it

to your advantage:

 

1. How the Cut Affects Buyers

Cheaper Borrowing (Especially for Variable-Rate Mortgages)

 

If you have — or are considering — a variable-rate mortgage (or an adjustable-rate mortgage), this kind of rate cut generally leads to lower interest rates, which means smaller monthly payments. For current homeowners with variable-rate mortgages, this could translate into immediate savings.

 

1. Fixed Rates May Become More Attractive

 

Fixed-rate mortgage rates are influenced indirectly by changes in policy rate through bond yields and market expectations. A cut tends to put downward pressure on bond yields, which can help soften fixed mortgage rates. If you’re someone who doesn’t like uncertainty or future rate rises, a fixed rate might be a safer bet. 

 

1. Increased Purchasing Power

 

With lower monthly payments (depending on the mortgage type), buyers may qualify for a larger loan or afford a house that was previously just out of reach.

 

Lower borrowing costs ease one of the biggest hurdles: how much mortgage you can take on without stretching your budget too thin.

 

1. Greater Flexibility with Timing

 

Buyers who had been waiting for rates to come down may see this cut as a signal that now is a better time to act. However, it’s also possible that more cuts lie ahead, so there are trade-offs between waiting and making a move.

 

Things to Watch Out For

 

Fixed-Mortgage Renewals & New Loans

 

If you lock in a fixed mortgage rate now, you’ll be getting something influenced by

current bond markets. But if rates continue downward, someone locking in later

might get a slightly better fixed rate. On the other hand, if rates go back up,

locking early avoids that risk.

 

Variable Rate Exposure

 

While variable rates may go down with this policy rate cut, they are also more

exposed to future rate hikes. If the economy shifts or inflation picks up again,

variable rates could creep back up. Therefore, it’s essential to understand your risk tolerance and maintain financial flexibility.

 

Other Costs Still Matter

 

Even with lower rates, a home purchase still involves down payments, closing

costs, mortgage insurance (if applicable), property taxes, maintenance, etc.

Having a strong savings plan and understanding total expenses is vital.

 

What Buyers Should Do Now

 

1. Get Pre-approved

 

With the interest rate lowering, getting pre-approval now can lock you in a rate (variable or fixed) or establish what you qualify for. It gives you negotiating power and clarity.

 

1. Compare Mortgage Types

 

Consult with mortgage brokers or lenders to explore both fixed and variable options. See what the monthly payments look like today vs. what projections are if rates fall further or rise again.

 

1. Budget for Fluctuations

 

If going variable, ensure your budget can tolerate small increases in payments. If fixed, check whether there are penalties or fees if you want to break or refinance early.

 

1. Watch Market Trends & Local Inventory.

As borrowing becomes marginally cheaper, buyer demand tends to rise, which can put upward pressure on home prices, especially in desirable neighbourhoods. So, keep an eye on what’s available, and act decisively when you find something you like.

 

What This Means for the Calgary (or Alberta) Market Specifically

 

While many of the rate cut effects are national, there are local dynamics to consider. Inventory in Calgary has had its own fluctuations — some sectors (condos, infill, suburban homes) are more sensitive to interest cost changes. Buyers in less expensive neighbourhoods may benefit more significantly. With economic ties to energy, trade, and other sectors, any shifts in business investment or employment in Alberta will interact with rate changes in complex ways. 

 

If the job market softens further, that could cool demand; on the other hand, lower rates might help keep housing more affordable. For first-time buyers in Alberta, lower rates mean potential relief — smaller down payment hurdles might be somewhat alleviated when financing costs drop. Still, it remains critical to have savings for upfront and ongoing costs.

 

Bottom Line

 

The Bank of Canada’s recent rate cut is a positive development for buyers — it eases borrowing costs, increases affordability, and may signal that we are entering a more favourable environment. But it’s not a magic wand. Market conditions, your mortgage type, local housing supply, and economic factors still play big roles. 

 

If you’re thinking of buying soon, now is a good time to explore your options — get clarity on what kind of mortgage makes sense, see what homes are available in your budget, and be ready to act. And, of course, working with a trusted real estate professional is more helpful than ever in guiding you through changing rate dynamics.

 

For any questions or inquiries, please contact us:

 

Phone: (403) 219-3000

Email: [email protected]

Website: unisonrealty.com