The Bank of Canada has just lowered its key interest rate by a quarter of a percent, bringing it down to 2.25%. This is the lowest it’s been since July 2022. For anyone with a variable rate mortgage, or those coming up for a renewal on a fixed-rate mortgage, this is good news. Lower rates mean smaller monthly payments and more flexibility for borrowers.
What This Means for Mortgage Payments
For example, a $400,000 variable rate mortgage could see monthly payments drop by roughly $157. That number will vary depending on your mortgage, but it gives you a sense of the potential savings. Lower interest rates make borrowing more affordable and could be an opportunity for first-time buyers.
Economic Challenges in Ontario
While lower interest rates are helpful for borrowers, they come alongside some challenging economic realities. Canada’s unemployment rate is over 7%, and certain industries are struggling more than others. In Ontario, the manufacturing sector, especially auto manufacturing, is facing difficulties, while trade tensions with the United States add further uncertainty.
Inflation has officially increased to 2.4% as of September. While this is far below the peaks we saw a few years ago, it’s still above the Bank of Canada’s target and continues to impact household costs, from groceries to energy. At the same time, Canada’s GDP growth is slow, with negative growth in the third quarter of 2025 and projections of just over 1% for the coming years.
What This Means for Ontario Homebuyers
If you’re fully employed and thinking about borrowing or buying a home, now could be a good time to take advantage of lower rates. But for those struggling with employment or uncertain about the economy, the challenges remain. The Bank of Canada is doing its best to balance these factors, but much depends on broader economic and government actions in the months ahead.
If you’re a first-time homebuyer in Ontario, there may be opportunities coming up, especially as interest rates move down. Keep an eye on the market and consider attending webinars or reaching out to a mortgage professional for guidance. Lower rates don’t just save money—they can open the door to homeownership when used wisely.
