5 predictions for 2025:

1. Interest rates to decline further

The Bank of Canada is expected to continue cutting rates another 1.25%-1.5% by the end of 2025. This could bring the prime rate down to around 4.45%, significantly easing borrowing costs for new and existing homeowners​.

Lower rates will likely fuel demand for buyers and refinancing as Canadians look to lock in savings on their housing costs.

2. Housing demand to rise

Affordability improvements driven by lower interest rates, combined with higher amortization limits now in effect (up to 30 years for insured mortgages), will encourage more buyers to enter the market​.

3.Moderate price growth in most Canadian markets

National home prices could see modest growth, driven by improved affordability but tempered by increasing housing supply from ongoing construction efforts aimed at tackling shortages​ (finally housing starts are improving overall).

4.Refinancing surge

Many homeowners with high rates and/or facing renewal in 2025 will refinance to consolidate high-interest debts into lower-cost mortgages. This will help improve household cash flow while reducing debt burdens.

5.Policy-driven market changes

Policies like the new $1.5M insured mortgage cap for first-time buyers and incentives for new builds will further stimulate activity, particularly in suburban markets​.

With 2025 shaping up as a pivotal year for affordability and market activity (also an election year!), staying informed and planning ahead will be crucial.

If you have questions about how to navigate your current situation (and set yourself up for 2025 changes), please reach out!

Leanne Funston
The Place To Mortgage - Mortgage Alliance
[email protected]
250-320-5514
www.leannefunston.ca