🇨🇦 Canada’s Housing Market Holds Strong—What It Means for Interest Rates in 2025
A new economic report from TD Economics reveals that while Canada’s overall economy is slowing, the Bank of Canada may not cut interest rates as aggressively as once expected. Why? Because the housing market is showing unexpected resilience.
🏦 Interest Rate Outlook: Fewer Cuts Ahead?
TD’s quarterly review highlights how global trade tensions and domestic policy shifts are shaping Canada’s economic landscape. Although slower growth is cooling inflation, the Bank of Canada’s policy rate is already within its “neutral range,” meaning dramatic rate cuts are unlikely.
The report suggests that instead of multiple cuts, the central bank may opt for a more cautious approach—possibly one or two rate reductions in 2025. This is largely due to the housing market already responding to earlier rate moves, showing signs of modest recovery.
📉 July Rate Decision: Holding Steady at 2.75%
On July 30, the Bank of Canada held its key interest rate at 2.75% for the third consecutive time, following a series of cuts that began in late 2024. Analysts now anticipate a potential rate cut in September, though the central bank remains focused on monitoring global trade disruptions.
🏡 Housing Market: A Delayed but Steady Comeback
According to TD, Canada’s housing market is gaining momentum—not just temporarily. Home sales have increased for four straight months, and average prices are up 5%. The rebound was delayed by U.S. tariff impacts but is expected to continue into 2026.
Despite ongoing affordability challenges, TD forecasts a stronger recovery next year. After a 2% dip in sales and flat prices in 2025, the market is projected to bounce back with 9% sales growth and a 5% rise in home prices.
The Canadian Real Estate Association (CREA) echoes this sentiment, noting that the market is entering its “long-expected recovery phase,” even as it adjusts its annual forecast.
💡 What This Means for Buyers, Sellers & Brokers
With housing now a key factor in monetary policy, the Bank of Canada sees less urgency for further rate cuts. The interest rate channel is already stimulating demand, and future decisions will depend on how inflation behaves.
For mortgage professionals, realtors, and homebuyers, this signals a period of cautious optimism. While affordability remains tight, the market is stabilizing—and opportunities are emerging for those ready to act.
Sam Ansari
Mortgage Broker | Centum Financial Services LP 📍 11160 Yonge Street, Richmond Hill, ON
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