With interest rates set to fall, good news is on the horizon for buyers and the wider economy. According to a recent Deloitte report, Canada’s economy should keep growing at a moderate pace in the coming year. More importantly, the report forecasts that interest rates will drop below 3% by 2025. This marks a big shift, especially for people who have waited for the right time to buy or to get a more affordable mortgage.
In January 2025, this post first appeared on this site. The figures, forecasts and dates below come from the time of writing. Some may have changed since.
Why interest rates set to fall matter
The past few years brought rising interest rates. Financing became more expensive, and homeownership moved out of reach for many people. Now inflation is easing and economic pressure is settling. So this predicted drop in rates points to new chances for buyers.
Lower rates mean smaller monthly mortgage payments. They also mean more borrowing power. As a result, some buyers may be able to afford homes that were out of reach before.
To learn more about the forecast, you can read the full article in the Toronto Star. You can also follow each rate decision on the Bank of Canada website.
How this impacts the housing market
A drop in interest rates is likely to bring new life to the real estate market. As financing gets cheaper, demand for homes will rise. That could push prices up in some areas. With rates set to fall, competition may grow. Still, it also gives careful buyers a chance to lock in good rates and secure a home before prices climb further.
History shows a clear pattern. When borrowing gets cheaper, more buyers return at the same time. Sellers then see more interest in their homes, and bidding can pick up again. For a closer look at this link between rates and prices, see my post on the {a(‘https://aqmuftirealty.com/impact-of-anticipated-interest-rate-cuts/’, ‘impact of anticipated interest rate cuts’)}.
Sellers should pay attention too. With rates set to fall, more buyers may return, and well-priced homes may sell faster. However, a busier market also brings more listings. So a good price, a clean home and strong marketing still make the biggest difference.
What rates set to fall mean for first-time buyers
Whether you are a first-time buyer or want a larger home, these market shifts open a window. However, the housing market can be complex, especially during a period of change. That is why working with an experienced real estate agent matters.
Start with a few simple steps. First, get a pre-approval so you know your price range today. Next, ask your lender how a lower rate would change your payment. Then build a budget that still works if rates fall more slowly than expected. My list of 10 steps for first-time buyers in Mississauga covers the rest.
It also helps to understand your mortgage choices. A variable rate usually moves with the Bank of Canada’s rate, so your cost can drop when rates fall. A fixed rate stays the same for the whole term, which gives you certainty. Each option has trade-offs. Ask your lender or mortgage broker to explain both in plain terms before you decide.
Finally, remember that forecasts can change. Economists often revise their views as new data comes in. So plan around a payment you can afford today, and treat any future drop as a bonus.
How I can help you
As a dedicated real estate agent, I can guide you through these changing conditions. My goal is to help you find the right property and get a good deal, especially as rates become more favourable. I can share insights on the timing of your purchase, your financing options and the neighbourhoods that fit your needs and budget.
With the right strategy, you can make the most of rates set to fall and reach homeownership sooner than you might think. Together, we can plan each step and turn your goal of owning a home into reality. So now is a good time to plan for your future.
Talk to a Mississauga real estate agent
Do you have questions about interest rates, financing or the right time to buy? I am happy to help. Please call me at 416 908 5600 or send me a message. And if this post helped you, you can also leave a Google Review. A. Q. Mufti, Sales Representative, RE/MAX Real Estate Centre Inc., Brokerage.
Disclaimer: this article was published on 16 January 2025 and reflects the information available at that time. Interest rates, prices, and government programs change, so check the current position before acting on anything here. It is provided for information only and is not financial, mortgage, tax or legal advice. A. Q. Mufti is a registered Sales Representative with RE/MAX Real Estate Centre Inc., Brokerage, Ontario, Canada.
