Mortgage Minute: August 8, 2025
The Toronto housing market is sending two completely different signals right now. The market for houses is heating up, while the condo market is cooling fast—all while fixed mortgage rates continue to climb. For anyone looking to buy, sell, or refinance, understanding this divergence is critical.
The Freehold Market Finds Its Footing
After months of uncertainty, the GTA’s freehold market showed surprising strength in July, with home sales jumping 10.9% year-over-year for the best July performance in four years. It seems a growing number of buyers are adapting to the economic climate and are moving forward with their purchasing decisions.
Condos Face a Cooldown
In stark contrast, the condo market is telling a different story. Average prices have fallen to a four-year low, down 9.3% from this time last year. This weakness is the result of a perfect storm: a wave of new condo projects, sold during the pandemic, are now reaching completion and flooding the market with inventory. This has happened just as pre-construction sales have slowed to their lowest levels in decades, reducing future demand.
The Reality of Rising Fixed Rates
The broader economic picture remains complex. Canada saw a surprise loss of over 40,000 jobs in July, reversing the strong gains from June. This confusion, along with stubborn core inflation, makes it very likely the Bank of Canada will hold its policy rate at 2.75% in September.
While this means variable rates aren’t changing, the 5-year Government of Canada bond yield has been volatile, putting upward pressure on fixed mortgage rates. Hopes for rates in the 3s are gone for the summer. Many mainstream lenders are now offering 5-year fixed uninsured rates in the 4.44% to 4.69% range, which directly impacts borrowing costs.
What This Means For Your Mortgage
Understanding these trends is key to any decision you make. The drop in condo prices could present a challenge for current owners who were planning to use their equity to trade up to a larger home. At the same time, rising fixed mortgage rates are increasing the real cost of borrowing, which affects your purchasing power—an important factor in the more expensive freehold market.
Navigating this fractured market requires a clear understanding of how these forces affect your personal financial situation.
If you want to see how these numbers and rates affect your own scenario, I can provide a detailed breakdown. Contact me today.
Sources:
- “Greater Toronto housing market sees best July in four years: real estate board,” The Canadian Press, August 6, 2025.
- “Toronto condo prices hit a four-year low,” Canadian Mortgage Professional, August 8, 2025.
- “The Edge Report,” Edge Realty Analytics, July 2025.
- “BoC still playing waiting game despite surprisingly weak July jobs report,” Canadian Mortgage Professional, August 8, 2025.
- “Weak jobs report unlikely to sway Bank of Canada in September, economists say,” Canadian Mortgage Trends, August 8, 2025.
- “Canada unexpectedly sheds 40,800 jobs, most since pandemic,” Bloomberg, August 8, 2025.
- “Bond yields tick lower amid continuing tariff turmoil,” Canadian Mortgage Professional, August 5, 2025.
- “What’s in store for Canadian mortgage rates?,” Canadian Mortgage Professional, August 5, 2025.