(Vancouver • Sep 17, 2025)
Quick Take
Today the Bank of Canada cut the policy rate by 25 bps to 2.50%.
After seven straight cuts ending in March and three holds, the easing cycle has resumed.
Most banks are expected to lower prime to ~4.70% (from 4.95%), directly benefiting variable-rate mortgages and HELOCs.
Next BoC decisions: Oct 29 and Dec 10. Some economists still see room for one more cut this year.
Fixed rates don’t move one-for-one with BoC; they track bond yields and could drift lower if yields keep easing. The U.S. Fed also announces later today, and markets lean toward a cut.
BoC: “With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks.”
7 Need-to-Knows for Homeowners & Buyers
Variable/HELOC: Expect a 0.25% drop in rate. If you have an adjustable-payment variable (e.g., certain Scotia products), your payment will fall.
Fixed won’t drop 0.25% today just because BoC cut—watch bond yields.
Payment math (rule of thumb): On adjustable variables, ~$15/month per $100,000 balance for a 25-bp cut (e.g., $650k ≈ $97.50/month; $48.75 bi-weekly). Actual results vary by amortization and product.
Set-payment variables: Payment stays the same, but more goes to principal.
Prime likely to 4.70%: Major banks typically pass through BoC moves (pre-cut prime widely at 4.95%).
When it shows up: Adjustable-payment changes kick in within the next 1–2 cycles at most lenders.
Calendar: Oct 29 and Dec 10 announcements are the ones to watch next.
Jargon-Busters
Policy/Overnight Rate: BoC’s key rate—now 2.50%.
Prime Rate: Banks’ benchmark lending rate—expected near 4.70% post-cut (from 4.95%).
Variable vs Adjustable:
Adjustable: Payment changes when rate changes.
Set-Payment: Payment fixed, interest/principal mix shifts.
Fixed Rate: Tied to bond yields, not directly to BoC’s move.
Insured vs Uninsured: <20% down is typically insured. Since 2024, 30-year amortizations are available for first-time buyers (and new builds) under federal changes—confirm eligibility.
What to do now
If you’re buying:
Refresh your pre-approval and rate holds; your affordability and payment projections may improve.
Re-weigh fixed vs variable based on your timeline and risk tolerance.
First-time buyers: Ask if 30-year insured amortization applies in your case (especially for new builds), as this can lower the monthly payment.
If you’re selling:
Rate cuts can pull sidelined buyers back. Use fresh comps and absorption stats to calibrate pricing and launch timing.
Reach out to Leo Nagaoka! (available in English & Japanese).
Shifts in the interest rate environment are the perfect time to update your financial plan or revisit your real estate strategy. Whether buying or selling, I provide tailored guidance based on the latest market data to help you make the best decisions.
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