Industry leaders say the rate cut is more psychological than financial but could spur activity – although specific markets will still fare better than others
The Bank of Canada’s latest 25-basis-point rate cut to 2.50% has drawn a measured but hopeful response from mortgage industry leaders, who say the move’s greatest impact may be on sentiment rather than on monthly payments.
“This rate cut is more about psychology than math. Even a small drop can give hesitant buyers and sellers confidence that the market is stabilizing after years of uncertainty,” Joel Fox, COO at Ownright, said. “We’re already seeing activity pick up, but prices remain well below their 2022 highs — and that gap will take time to close.”
He described the decision as a potential turning point for the sector.
Signals matter more than cents
Industry experts widely agreed that the cut’s immediate financial relief for borrowers is modest. According to Ratehub.ca’s mortgage payment calculator, a typical homeowner with a $624,277 mortgage will save just $84 per month following the cut.
“Today’s rate cut will mean that Canadian savers and those with passive investments such as GICs, will see their rate of return lower. However, from a historical perspective, these rates are still competitive and provide a good option for those seeking stability in volatile market conditions,” Penelope Graham, mortgage expert at Ratehub.ca, said.
Graham added that the cut could draw more buyers into the market: “Many have stayed benched due to a combination of economic uncertainty, and steep borrowing costs. Now that both have eased slightly – and the fact that plenty of inventory has kept home prices from reheating – buyers may feel now is the time to take advantage of today’s attractive affordability conditions.”
Regional shifts and market divides
The impact of the rate cut is not expected to be uniform. “Montreal, Vancouver and Ottawa are currently leading the pickup in activity while Toronto cools slightly. This isn’t a uniform recovery, and this trend may continue with the rate cut,” Fox said. He also pointed to the ongoing divide between buyers and sellers: “With prices 19% below their 2022 highs, buyers feel they’re entering at a discount while sellers cling to peak-era expectations. A rate cut could help bridge that divide by giving both sides more confidence.”
Data dependence and sectoral challenges
The Bank of Canada cut rates as the economy showed new signs of weakness, including 66,000 jobs lost last month and unemployment at its highest level in almost ten years, excluding the pandemic. The central bank also dropped its forward guidance, making future rate cuts dependent on new data and leaving the door open to further debate among its policymakers.
Long-term, Fox cautioned that not all property types will benefit equally. “Lower borrowing costs may help close the buyer–seller gap over time but condos face unique challenges — from high inventory and slower new builds to fewer investors — which could leave this segment lagging even as detached homes and other property types rebound,” he said.
Cautious central bank, uncertain outlook
Charles St-Arnaud, chief economist at Alberta Central, said the Bank’s move was expected but signaled caution rather than a new era of easing. “The overall message from today’s decision is that the Canadian economy has deteriorated since the July meeting, especially in light of the recent job losses, and that underlying inflationary pressures are abating. Nevertheless, uncertainty regarding US tariffs and their impact on the economy remains high,” St-Arnaud said.
He noted that the removal of forward guidance means the Bank will be “more reactive to incoming data and events” and that “there may not be consensus within the Governing Council as to whether further cuts are needed, at this point.” He flagged that further cuts could come later in the year if core inflation eases below 3% and the economy remains tepid.
