Bank of Canada Cuts Key Interest Rate to 2.25% – October 29, 2025

This morning, the Bank of Canada lowered its overnight policy rate by 25 basis points, from 2.5% to 2.25%. The move marks another step toward supporting economic growth as inflation continues to ease and the job market shows signs of softness.

Economic Outlook

The Bank noted that GDP growth is expected to stay subdued through the second half of 2025, though modest gains in consumer spending, government investment, and housing activity are expected to provide some lift.
Unemployment remains elevated at 7.1%, a signal that businesses are still cautious about expansion and hiring. The Bank projects economic growth of 1.2% this year, slowing slightly to 1.1% in 2026, before rebounding to 1.7% in 2027.

Inflation and Policy Direction

Core inflation is holding near 2.5%, but policymakers expect it to trend lower in the months ahead. The Bank’s tone suggests confidence that inflation is now under control, allowing it to focus more on stimulating the economy without reigniting price pressures.
If the economy performs in line with projections, the current rate of 2.25% is expected to remain appropriate to sustain growth and keep inflation near the 2% target.

What This Means for You

Interest rate changes ripple quickly through the real estate market, and this cut will likely have several effects worth noting.

Home Values

Lower borrowing costs often increase buyer activity, which can help stabilize or lift home values, especially in desirable markets like Richmond and the Greater Vancouver area. If you’ve been considering selling, the coming months could see renewed demand from buyers eager to lock in more affordable mortgage rates.

Mortgage Renewals

For homeowners approaching renewal, today’s rate cut could bring welcome relief. Fixed-rate mortgage offers may start to come down slightly, while variable-rate borrowers could see an immediate drop in monthly payments. This is a good time to review your mortgage options, as even a quarter-point reduction can make a meaningful difference over the life of a loan.

Buying Plans

If you’re planning to buy, lower rates improve purchasing power. With affordability stretched in many parts of Metro Vancouver, this change could be the opportunity to re-enter the market or move up to your next home. However, inventory levels and competition may rise again if rates continue to fall, so timing and preparation remain key.

Market Outlook

At 2.25%, the overnight rate now sits at the lower end of the Bank’s neutral range, meaning it’s designed to neither stimulate nor restrict the economy. But with ongoing global uncertainty and shifting trade conditions, there’s still potential for another small cut in the coming months.
Overall, this shift signals a more supportive environment for real estate activity through early 2026, one that rewards informed decisions and strategic timing.

If you're navigating this dynamic market, whether buying or selling, let's talk strategy. Our team can guide you through the most efficient processes, aiming to save you time, money, and hassle. Contact us today, and let's make your real estate journey successful!

Call or text me at 604-276-2335 or visit ConnectWithRemax.com to get started.