Back to Blog

Bank of Canada Cuts Rates to 2.25% – What It Means for Your Mortgage

Market Updates Paul Zieba 29 Oct

Paul Zieba, Mortgage Broker | Edmonton & Alberta
October 29, 2025

The Big News: Bank of Canada Drops Rates to 2.25%

Today, the Bank of Canada cut interest rates by 0.25% (25 basis points). As a result, we’re now sitting at 2.25%.

However, here’s what matters more than the cut itself: Governor Macklem said “the policy rate is at about the right level.”

In other words, they’re likely done cutting for now.

What This Means for Your Buying Power

Here are real numbers you can understand:

Let’s say a buyer qualified for a $500K mortgage two months ago. Today, that same buyer now qualifies for $517,500.

  • Same income
  • Same down payment
  • $17,500 more buying power

In short, that’s the practical impact of today’s rate cut.

Why the Bank of Canada Is Hitting Pause

The Bank isn’t being cautious just because. Instead, here’s what’s actually happening:

  • Economic growth is slowing: They’ve cut their forecasts to 1.2% for 2025 and 1.1% for 2026 (down from 1.8%)
  • The economy is struggling, not thriving
  • US tariffs are creating what they call a “structural transition”
  • At 2.25%, we’re at the bottom of their neutral rate range

Ultimately, this means one thing: Don’t expect big rate drops from here.

What You Should Do Now

If You’re Waiting for Lower Rates

It’s time to recalibrate your expectations.

If you’ve been holding out for rates under 2%, this may be as good as it gets for the foreseeable future. Therefore, the buying power boost we just received might be all we see.

If You’re Ready to Buy

Now is your window.

The rate cut just improved your purchasing power. Unfortunately, waiting for rates to drop further could mean missing out while prices adjust upward or competition increases.

If You’re Refinancing or Renewing

Now’s the time to have the conversation.

With rates at 2.25% and the Bank signaling they’re done cutting, this is a good time to lock in your rate or explore refinancing options.

The Bottom Line

Today’s rate cut puts more money in your pocket – $17,500 more buying power for every $500K you’re borrowing.

But the Bank of Canada just told us they’re done being aggressive. At 2.25%, we’re at the bottom of their target range, and they’re calling it “about right.”

The opportunity: If you’ve been waiting for better rates to make your move, this might be as good as it gets for a while.