The Bank of Canada made another move this morning, lowering its key overnight rate by 0.25% to 2.25% — the second consecutive cut this year. While that’s welcome news for borrowers, the tone of today’s announcement suggests we may be nearing the end of this easing cycle.

Let’s unpack what this means for mortgages, renewals, and anyone considering a refinance or purchase this fall.

1. Why the Bank Cut Rates Again

The Bank’s latest Monetary Policy Report paints a clear picture: growth in Canada is slowing.

• The Bank now expects GDP growth of only 1.2% in 2025, down from earlier projections of around 1.8%.
• Inflation has settled near the 2% target, giving policymakers more breathing room.
• A softer U.S. economy and ongoing trade policy uncertainty are weighing on exports and business investment.

In short, the Bank is trying to provide a cushion for households and businesses as economic momentum cools. But they also signalled they’re approaching a level where further cuts could risk reigniting inflation.

Translation: today’s cut was about stabilizing growth, not launching a long series of rate drops.

2. What This Means for Mortgage Rates

This rate cut will first trickle down to variable-rate mortgages and home equity lines of credit (HELOCs). Most lenders will lower their prime rate by 0.25%, which means variable-rate borrowers should see a modest drop in their monthly payments.

For fixed-rate mortgages, the story is a bit different. Fixed rates are tied more closely to the bond market — and bond yields have already priced in many of these rate cuts. That means we may not see huge drops from here unless economic data deteriorates further.

3. Why This Matters for Borrowers

If you’re renewing your mortgage soon or carrying higher-interest debt, this shift creates a few strategic opportunities:

• Refinance to consolidate debt: With lower borrowing costs and softer inflation, this can be an ideal window to roll high-interest credit cards or loans into your mortgage.
• Explore shorter terms: If you believe rates could stabilize or edge lower in 2026, a 2- or 3-year fixed term might offer flexibility without locking in too high for too long.
• Reverse mortgage clients benefit too: as interest rates fall, the net cost of borrowing against home equity improves — and retirees can preserve more cash flow while staying in their homes.

4. What Comes Next

The Bank signalled that it believes rates are now “about right” for the current outlook — meaning don’t expect a long string of further cuts unless the economy worsens. Inflation is projected to hover near 2% for the next few years, so the Bank is more likely to hold steady while it assesses how consumers and businesses respond.

For the mortgage market, that means stability. We’re shifting from a volatile, “wait-and-see” environment to one where planning and proactive advice matter most.

5. My Takeaway

For Ontario homeowners and buyers, today’s decision is good news — but not a green light to overextend.

Lower rates can ease monthly payments and improve affordability, but slower economic growth also means lenders remain cautious. If you’re renewing, refinancing, or buying, now is the time to review your full financial picture — not just chase the lowest rate.

Smart strategy beats rate chasing every time.

Whether you’re exploring a refinance, a debt-consolidation plan, or want clarity on where rates are headed, I’m happy to help you map out your next move.

Bottom Line

• BoC rate: cut to 2.25%
• Inflation: steady near 2%
• Growth: slowing to 1.2% in 2025
• Outlook: likely pause ahead

Lower rates are here — but the Bank’s tone signals we’re closer to the bottom than the beginning.

Now’s the time to take advantage of improved affordability and align your mortgage strategy with the new landscape.

Reach out if I can help.