Interest Rate Trends and Forecasts: What You Need to Know as a Homebuyer or Seller

As we move deeper into 2025, Canada’s economic landscape is evolving—and so are interest rates. Whether you're thinking about buying or selling, understanding these shifts is key to making confident, informed decisions in today’s real estate market.

Current Interest Rate Climate

The Bank of Canada has paused its series of rate cuts, holding the benchmark interest rate steady at 2.75%. This comes after several reductions in 2024 aimed at stimulating the economy. The pause reflects cautious optimism as inflation cooled to 2.3% in March, slightly below expectations. Economists suggest that if inflation continues to trend downward, we may see additional rate cuts later this year—potentially bringing the policy rate closer to 2.0% by the end of 2025.

What This Means for Homebuyers

Variable Mortgage Rates: These currently hover around 4.0% and are forecasted to dip closer to 3.13% by year-end.

Fixed Mortgage Rates: Five-year fixed rates may fall by up to 0.5%, potentially landing near 4.0%.

Bottom Line: If you've been waiting to buy, the next few months may offer more affordable mortgage options. It's a good time to review your buying power and consider pre-approval before competition increases.

What This Means for Sellers

The real estate market has softened, with March 2025 home sales hitting their lowest levels since 2009. National average prices have dipped by 3.7% year-over-year, partly due to economic uncertainty and buyer hesitation.

The Upside? As interest rates decline, buyers are likely to re-enter the market in greater numbers—boosting demand and possibly stabilizing or lifting home prices.

Looking Ahead

The Bank of Canada’s next announcement is set for June 4, 2025. Many experts anticipate another rate cut, which could spark more movement in the market.

Final Thoughts

Whether you're buying your first home, upsizing, or selling an investment property, staying ahead of market trends is crucial. Lower interest rates may create opportunities on both sides of the transaction.

Need help deciding if now is the right time to make your move? I'm here to guide you.

Let’s talk.

Leonie Morris
Honest, Reliable & Genuine
"My goal is to help you achieve YOUR goals."