Mortgage Minute: Sept 19, 2025
The Canadian mortgage landscape shifted this week with the Bank of Canada’s first interest rate cut since March. While this move injects a dose of cautious optimism into the national market, a closer look at new data reveals a widening gap between the national trend and the specific challenges and opportunities emerging right here in Toronto.
For homeowners, prospective buyers, and real estate professionals in the GTA, understanding this divided market is the key to making smart, strategic decisions.
The Rate Cut: A Cautious Step Forward
The Bank of Canada reduced its benchmark overnight rate by 25 basis points, bringing it to 2.50%. The decision was a direct response to a softening national economy, recent job losses, and easing inflation risks.
However, the Bank’s messaging was notably cautious. Governor Tiff Macklem was careful to make no promises about future cuts, stating that all upcoming decisions will be strictly data-dependent. While many economists believe another cut is possible this fall, the path forward is far from certain.
A Divided Housing Market: National Strength vs. Toronto’s Reality
On the surface, the Canadian housing market appears robust. The Canadian Real Estate Association reported that August home sales reached a four-year high, rising 1.9% year-over-year. This marks the fifth consecutive month of increased national activity.
But the story in Toronto is different. While sales in markets like Vancouver and Montreal showed gains, the GTA saw activity cool slightly. The city’s condo market, in particular, is facing significant headwinds. Recent reports show condo prices are down 19% from their 2022 peak, and one-bedroom rents have plunged 12% year-over-year—the largest drop of any Canadian city.
Policy Shift: Greener Homes Loan Program Ends
Adding another layer to the week’s news, the federal government abruptly cancelled the popular Canada Greener Homes Loan program. This program offered homeowners interest-free loans up to $40,000 for energy-efficient retrofits. The government announced that the program’s funding is now fully allocated and new applications will cease after October 1st.
What This Means For Your Mortgage Strategy
For Homeowners and Potential Refinancers: The rate cut offers immediate, though modest, relief for those with variable-rate mortgages or Home Equity Lines of Credit (HELOCs). For those in the Toronto condo market, the price softening may impact your home’s value. This is a critical time to get an updated, accurate valuation. You can get a detailed analysis of your property’s current worth with a Home Report.
For Prospective Buyers: This divided market creates a rare window of opportunity, especially for first-time homebuyers who were previously priced out of the Toronto condo market. Softening prices combined with a potential easing of interest rates creates a favourable environment. The key is to be prepared to act decisively by getting underwritten upfront.
For Business Owners: A shifting market can create unique opportunities to leverage your business income for a strategic purchase or refinance. If you are a self-employed professional, understanding how lenders view your finances is critical. My Business Owners Mortgage Toolkit provides a clear guide on this.
The market is complex, but clarity is possible with the right strategy.