Lower rates may lift some cities, but Toronto and Vancouver remain unmoved
As the Bank of Canada prepare for another anticipated rate cut this week, a real estate expert warned that lower borrowing costs alone were unlikely to jumpstart housing activity in the country’s largest markets.
Instead, the benefits were expected to be felt first in smaller cities, with Toronto and Vancouver still hampered by persistent economic uncertainty.
“Buyers are still contending with a soft job market, and resale activity has flattened while new construction is being driven mostly by rentals, not ownership,” Robert Saunders, CEO of digital real estate law platform Ownright, said.
“That shows developers and households alike are waiting for stability, not just lower borrowing costs. A further rate cut could help sustain momentum in markets like Montreal and Ottawa, where activity is already recovering, but in larger centres like Toronto and Vancouver, it’s unlikely to move the needle until confidence in employment and financing returns.”
Affordability remains a hurdle
While a rate cut may offer some relief for prospective buyers, Saunders emphasized that affordability challenges remained entrenched. He added that another rate cut could spur gradual activity but won’t offset wage stagnation or high cost-of-living pressures.
Recent data from the Canadian Real Estate Association showed that national home sales slipped 1.7% in September compared to August, halting a five-month run of gains that began in April.
The decline was most pronounced in Greater Vancouver, Calgary, Edmonton, Ottawa, and Montreal, which collectively outweighed modest increases in the Greater Toronto Area and Winnipeg.
Regional divide deepens
The impact of rate cuts is expected to be uneven. “A further rate cut could help sustain momentum in markets like Montreal and Ottawa, where activity is already recovering,” Saunders said.
However, he cautioned that Toronto and Vancouver may remain laggards until there is a broader recovery in employment and financing confidence.
Economists expect the Bank of Canada to trim its policy rate to 2.25% as trade tensions, sluggish GDP, and weak retail data offset September’s strong job gains and higher inflationhttps://t.co/DdvMIREd8d
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 28, 2025
Construction trends signal caution
Developers have also been slow to respond to lower rates, with most new construction focused on rental units rather than ownership. If this rate cut isn’t enough to push developers back to construction, Saunders believed that future supply gaps could widen. This construction imbalance could lead to longer-term issues, especially if demand returns before supply can catch up.
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