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Bank of Canada cuts rate to 2.50%

Published 10:56 PDT, Fri October 24, 2025

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October mortgage update and what this mean to you…

The Bank of Canada made headlines last month by trimming its key interest rate to 2.50 per cent. This is the first rate cut we’ve seen in several months, and it brings borrowing costs to their lowest level in three years.

So what does this mean for you as a homeowner, a buyer, or someone coming up to renewal? Let’s break it down.

Why did the Bank of Canada cut rates?

The Bank of Canada lowered rates because the economy has started to cool and inflation is gradually moving closer to the target range. Here are the highlights:

Policy rate: Down to 2.50 per cent, which means immediate relief for anyone with a home equity line of credit (HELOC) or a variable-rate mortgage.

Inflation: Headline inflation is sitting near 1.9 per cent, while core inflation is around 2.7 per cent. Still slightly high, but trending downward.

Economic growth: The Bank noted that Canada has absorbed global trade uncertainty better than expected, but slower job growth signals that households are feeling the pinch.

Outlook: If this trend continues, another small cut could come later this year.

If you’re renewing your mortgage

Renewals are the biggest story right now. By 2026, nearly 60 per cent of all Canadian mortgages will need to be renewed. Many homeowners who locked in ultra-low rates during the pandemic will be renewing at rates closer to 4 per cent.

Today’s 5-year fixed: Around 3.9 per cent–4.4 per cent, compared to 1.7 per cent in 2021.

Impact on payments: On a $500,000 mortgage, this change can mean $750–$850 more per month in payments.

What you can do: Don’t wait until your renewal notice arrives. You can typically secure a new rate 90–120 days in advance. This gives you a chance to shop the market and lock in the best deal.

If you’re buying a home

Choosing between fixed and variable still comes down to your comfort level and long-term plans.

Fixed rate (~4.09 per cent)

Payment on $500K over 30 years: ~$2,420/month

Good if you want predictable payments and long-term stability

Less flexible if rates fall and you want to take advantage

Variable rate (~4.70 per cent – .50 per cent)

Current payment: ~$2,350/month

If rates fall by 0.50 per cent, your payment could drop to ~$2,110/month

More flexible if rates decline further

Payments could rise again if inflation flares up

Bottom line: A fixed rate buys peace of mind, while a variable rate may reward you if cuts continue.

What’s happening in the Vancouver housing market?

The local real estate market is adjusting along with interest rates.

Benchmark prices (Aug 2025):

Detached homes: ~$1.95M (-4. per cent year-over-year)

Townhomes: ~$1.08M (-3.5 per cent)
Condos: ~$734K (-4.4 per cent)

Overall composite: ~$1.15M (-3.8 per cent)

Sales: About 1,959 homes sold in August, up slightly from last year but still below the 10-year average.

Inventory: Active listings are up nearly 19 per cent from last year, giving buyers more choice.

Market balance: The sales-to-new-listings ratio is ~46 per cent—a balanced market, meaning neither buyers nor sellers hold a major advantage.

This balance is good news for buyers who were previously squeezed out by bidding wars. It also means sellers need to price realistically in today’s market.

Key takeaways

Rates are easing: The cut to 2.50 per cent provides relief for variable-rate borrowers and opens the door for more cuts if the economy slows further.

Renewals are crucial: If your mortgage comes due in the next 12–18 months, start planning early. Even small differences in rates can add up to thousands in savings.

The market is balanced: With more listings and softer prices, buyers have breathing room. Sellers can still succeed if they adjust expectations.

Strategy matters: Whether fixed or variable, the right choice depends on your risk tolerance, timeline, and financial goals.

Final thoughts

The shift we’re seeing this fall marks an important turning point. After several years of rate hikes, we’re finally moving into a period where borrowing costs are easing. This creates opportunities for both buyers and current homeowners—but timing and strategy will make all the difference.

If your renewal is coming up, or if you’re thinking about purchasing this fall, now is the time to connect. I’d be happy to review your options, compare lenders, and help you make the most of this market. Let’s make sure you’re prepared for the next step.