Bank of Canada Holds at 2.25%—What It Means for Canadian Real Estate

By Ron Alfred De Guzman, MaxWell Realty Blogs | December 11, 2025

The Recent Announcement

Following yesterday's Bank of Canada decision to hold its policy rate at 2.25%, buyers, sellers, and investors across Canada are asking what this means for real estate. With borrowing costs now expected to remain steady, the mortgage rate environment you're navigating today is likely here through mid-2026.

The Economic Backdrop

Global economies are weathering U.S. tariffs better than expected, but uncertainty lingers—especially for trade-dependent Canadian regions like Southern Ontario manufacturing towns, B.C. lumber communities, and Alberta energy hubs. Job security in these areas directly affects mortgage qualification and buyer confidence.

Canada's economy grew 2.6% in Q3, but that's misleading: almost all growth came from volatile trade numbers while domestic demand stayed flat. The Bank expects weaker Q4 growth before a 2026 rebound. For real estate, that means no near-term surge in buyer demand from economic momentum, and sales will stay driven by mortgage rates, not broad income growth.

The upside? Employment is improving. Unemployment dropped to 6.5% with solid job gains over three months, quietly supporting markets like Toronto and Vancouver where buyers are stretching to qualify. Trade-exposed sectors remain weak and wage growth modest, so borrowing power isn't accelerating.

Inflation sits at 2.2%—well-behaved and near the Bank's 2% target for over a year. Short-term readings may tick higher due to last year's GST/HST holiday base effects, but excess supply in the economy should offset any trade-related cost pressures. No inflation scare means no rate hike pressure.

What You Can Expect in the Real Estate Market

With rates on hold and the Bank calling the current level "about right," here's what you can reasonably expect:

• Five-year fixed mortgages to stay in the low-to-mid 4% range
• Variable rates tied to prime (currently ~5.45%) to remain stable through at least mid-2026

Affordability stays strained versus the ultra-low-rate era, but the biggest downside risk—another hike—is off the table.

Markets that were waiting for a rate-drop buying frenzy (Toronto, Vancouver, cottage country) will likely stay range-bound. Areas with better affordability and improving employment should continue seeing steady demand.

The Bottom Line

The Bank is in wait-and-see mode, ready to act if trade chaos escalates or inflation surprises. For housing, the message is clear: rates aren't rising, they're not dropping fast, and stability is the new normal. Plan accordingly.

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This blog post is provided for informational purposes only. MaxWell Realty does not provide financial, legal, or investment advice. The content above reflects general economic and market observations and should not be considered specific advice for your individual situation. For personalized guidance on buying, selling, or investing in real estate, please consult with a qualified real estate professional, financial advisor, or other appropriate expert.

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