How the Bank of Canada’s rate hold could impact you
Key Takeaways:
The Bank of Canada (BoC) just announced it is holding its lending rate steady at 2.75%
This means that borrowing rates on many financial products, such as loans and mortgages, are unchanged
TD Economics predicts that rate relief will come at some point in 2025, and the BoC could cut its rate by 50 basis points total by the end of the year
The next BoC rate announcement is on September 17
Canada’s central bank is holding its lending rate steady at 2.75% for the summer.
On July 30, the Bank of Canada (BoC) announced it is yet again maintaining its lending rate following a previous rate hold in June.
In its announcement, the BoC said: “With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade.”
Leslie Preston, Managing Director & Senior Economist at TD Economics, said the rate hold is not surprising.
“Canada’s economy is holding up better so far than most have feared,” Preston said. “That, paired with elevated core inflation, means the Bank of Canada has more time to assess the current market uncertainty before it makes its next move.”
What a rate hold could mean for Canadians
The BoC’s lending rate is used as a benchmark by banks to set interest rates on financial products such as mortgages, personal loans, and business loans.
So, when the BoC cuts its lending rate, it can become cheaper to borrow money. And when the BoC’s lending rate goes up, it can become more expensive.
When the BoC holds its lending rate steady, not much changes for Canadians. For Canadians with both variable rate mortgages and fixed rate mortgages, things will remain status quo.
Will the Bank of Canada cut its lending rate in 2025?
Preston said that while the BoC opted to hold its rate in July, two cuts of 25 basis points each could be coming in the near future.
“As economic fallout from the tariffs becomes evident, TD Economics expects the Bank of Canada to reduce its lending rate further, taking it to 2.25% by the end of the year,” Preston said.
“This should provide more support to growth down the line, particularly in residential investment, where we expect pent-up demand for housing to start contributing to growth again in the second half of this year.”
The next BoC rate announcement is on September 17.
https://stories.td.com/ca/en/article/bank-of-canada-rate-announcement-july-2025
CREA Updates Resale Housing Market Forecast Amid Continuing Economic Uncertainty
In CREA’s April forecast, the expectation was flat sales and average home prices at the national level in 2025 compared to 2024. It was a significant revision to January’s forecast of a recovery year, as the threat of steep tariffs from the United States had become reality and had to be incorporated into the outlook.
For this most recent forecast, revisions are much smaller. Sales and average home prices are now forecast to post small declines in 2025 compared to 2024, as the tariff chaos and uncertainty that drove so many buyers back to the sidelines earlier this year ended up taking a larger bite out of activity in British Columbia, Alberta, and Ontario than was expected three months ago.
The good news is markets appear to be entering their long-expected recovery phase, fueled by pent-up demand, lower interest rates, and an economy that is expected to avoid worst-case tariff scenarios. As such, it’s looking like the timing of the start of that recovery may have been shifted from the spring to the summer by the cloud of extreme economic uncertainty earlier this year.
Some 469,503 residential properties are forecast to trade hands via Canadian MLS® Systems in 2025, representing a 3% decline from 2024. That said, British Columbia, Alberta, and Ontario are the only provinces forecast to post declines this year, slightly offsetting gains everywhere else.
The national average home price is forecast to edge back by 1.7% on an annual basis to $677,368 in 2025, which is about $10,000 lower than was forecast back in mid-April. Only British Columbia and Ontario are forecast to see declines in average home prices this year, but the combination of those declines, along with fewer sales in those expensive provinces was enough to offset price gains in the range of 4% to 8% in all other provinces in 2025.
In 2026, national home sales are forecast to rebound by 6.3% to 499,081 – which would put activity back on track with what was expected in the April forecast.
That said, it would still mark the fourth straight year for sales failing to crack the half million mark, something that has only occurred seven times going back to the first recorded instance in 2007.
The national average home price is forecast to increase by 3% from 2025 to $697,929 in 2026. This would mark the sixth straight year where the national average home price remained in and around the $700,000 range.
That said, it’s important to reiterate that all forecasts are still subject to very high levels of uncertainty, though maybe less now than in the first half of they year.
https://www.crea.ca/media-hub/news/crea-downgrades-resale-housing-market-forecast-amid-tariff-uncertainty-and-economic-uncertainty/
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