Bank of Canada Says More Easing Ahead
The Bank of Canada has signalled that its rate-cutting cycle is far from over. As inflation cools and economic momentum slows, policymakers are shifting gears toward a more accommodative stance. For Canadian borrowers, homeowners, and investors, this could mark the beginning of a friendlier interest rate environment — one that brings relief after years of tightening. In this article, we break down what the BoC’s latest messaging means, why more easing is expected, and how it could impact your mortgage or investment strategy in the months ahead.
💡 What a BoC Rate Cut Means for Canadians
| 📌 Area | 🔍 Typical Impact |
|---|---|
| 🏠 Variable Mortgage Rates | Lower rates mean smaller monthly payments for those with adjustable-rate mortgages. |
| 💳 Lines of Credit | Interest charges decrease, making borrowing cheaper on HELOCs and personal credit lines. |
| 🏦 Fixed Mortgage Rates | Not directly affected, but bond yields may drop — pulling fixed rates down over time. |
| 💼 Business Loans | Lower borrowing costs can support growth for small and mid-sized businesses. |
| 💰 Savings Accounts | Lower rates typically mean reduced returns on savings, GICs, and deposits. |
Following October’s highly anticipated interest rate cut, the Bank of Canada released its latest Monetary Policy Report (MPR), detailing the economic reasoning behind a 50-basis point reduction in the policy rate. This move lowers Canada’s prime rate to 5.95% — the lowest it’s been in two years. It’s a clear sign that the central bank is prioritizing growth and stability amid rising market volatility and economic slowdown concerns.
While lower rates are welcome news for borrowers, they’re also a signal that the BoC sees continued economic weakness ahead. Let’s dive into what this means for Canadians.
Economic Growth and Inflation Outlook
Canada’s economy is cooling. Real GDP per capita is declining, and while growth is forecast to improve gradually into 2025 and 2026, it’s a modest recovery. The BoC projects 2.25% GDP growth over that period, driven by consumer spending and business investment.
On the inflation front, the BoC reports that consumer price inflation has finally returned to the 2% target and is expected to remain within the 1% to 3% range. Still, risks remain, especially with global energy prices and supply chain disruptions looming.
Labour Market Conditions
Canada’s job market is softening, especially for youth and newcomers. Unemployment is trending up, even though wage growth remains strong. However, that wage growth is outpacing productivity, which could keep services inflation high.
The BoC’s rate cuts aim to stimulate job creation, but with balance — avoiding the kind of overstimulation that could reignite inflation.
Impact on Mortgages and Borrowers
For variable-rate and adjustable-rate mortgage (ARM) holders, this rate cut translates into immediate savings. On average, borrowers save around $30 per $100,000 on ARMs and $42 per $100,000 on HELOCs.
However, if you’re locked into a fixed-rate mortgage, you won’t feel this shift just yet. Fixed rates depend more on bond yields, which haven’t dropped much since the announcement.
Residential Investment Recovery
The BoC is expecting a modest rebound in housing investment. Lower rates, upcoming changes to mortgage insurance rules, and increased demand should support both homebuying and renovations.
That said, high construction costs and affordability concerns remain major hurdles — especially in urban centres like Toronto and Vancouver. Government initiatives like unlocking underused land and increasing financing for secondary suites are a step in the right direction.
What Lies Ahead?
Looking ahead, markets are pricing in more rate cuts. Economists expect the BoC to reduce its policy rate by up to 100 bps over the next year, bringing it closer to the neutral zone of 2.25% to 3.25%.
Inflation appears under control, with September’s CPI at 1.6%. Core inflation (CPI-trim and CPI-median) is also down to around 2.3% and 2.4%. Business and consumer expectations have also started to normalize.
If these trends hold, we may see the prime rate fall to around 4.95% in 2025. That would make variable rates increasingly attractive and may bring more buyers into the housing market.
Mortgage Strategy Recommendations
So what’s the smarter move now — fixed or variable?
Five-year fixed rates have already fallen roughly 150 basis points over the past year. But unless the economy contracts further, there may not be much more room to drop. That makes fixed rates a good option for conservative borrowers who want payment stability.
Variable-rate mortgages, on the other hand, could offer better long-term value — especially if you’re comfortable with short-term volatility. Just be sure not to try and “time the market.” Choose a product that aligns with your risk tolerance and financial plan.
Final Thoughts
October’s rate cut is a sign that monetary policy is shifting into a more supportive mode. And for homeowners or prospective buyers, it could be the ideal time to lock in favourable mortgage terms.
Whether you’re considering refinancing, purchasing, or renewing, talk to a Mortgage.Expert advisor to explore your best strategy. With rates changing fast, expert guidance can help you stay ahead.
Why Choose Mortgage.Expert
We do mortgages differently. Our team of salaried advisors works for you, not for commissions. That means honest advice, personalized recommendations, and access to some of the lowest rates in Canada.
From first-time buyers to seasoned investors, Mortgage.Expert is here to help you navigate Canada’s evolving mortgage landscape — 100% online, transparent, and stress-free.
Ready to take advantage of falling rates? Connect with a Mortgage.Expert advisor today.
Clara Desai
Articles: 294Related Posts
Stuck with a Mortgage Decision?
Don’t stress — our team is here to help. Reach out for free, no-obligation guidance.
Contact the Experts