Bank of Canada Pauses Rate Cuts: What This Means for Homeowners and Buyers

After seven consecutive interest rate cuts, the Bank of Canada announced on Wednesday, April 16, 2025, that it will maintain its policy interest rate at 2.75%. This marks the first time in over a year that the Bank has opted not to adjust the rate, signaling a shift toward caution amid rising global uncertainty.

Just one year ago, the policy rate stood at 5%. The series of cuts since then has brought much-needed relief to Canadian homeowners and prospective buyers, making home ownership more attainable and reducing borrowing costs—particularly for those with variable-rate mortgages.

Why Has the Bank Chosen to Hold the Rate?

In its official statement, the Bank cited growing economic uncertainty stemming from escalating global trade tensions—particularly due to unpredictable policy shifts by the United States. Tariffs on products like steel, aluminum, and automobiles have increased costs and created instability, complicating projections for inflation and GDP growth.

The Bank’s Monetary Policy Report outlines two potential outcomes:

1. Trade tensions gradually ease, supporting economic recovery by late 2026; or

2. A prolonged trade conflict leads to rising inflation and potentially triggers a recession in Canada.

Given these risks, the Bank of Canada is taking a cautious approach, balancing signs of economic resilience against the threat of external disruptions.

Why This Matters for Home Buyers

Although the Bank did not introduce another rate cut, interest rates remain historically low. This pause may indicate a near-term stabilization in borrowing costs, which is important for anyone considering homeownership or refinancing.

If you’ve been waiting for the right time to secure a mortgage, this may be an opportune moment to act. As of April 16, five-year fixed mortgage rates start at approximately 3.87%, according to REALTOR.ca’s Mortgage Qualification Tool. These rates—linked more closely to long-term bond yields than to the BoC’s policy rate—are still influenced by inflation expectations and global financial trends.

Impact on the Canadian Housing Market

The Canadian Real Estate Association (CREA) has revised its housing market forecast in light of current conditions. Home sales for 2025 are now projected at 482,673 units, roughly the same as 2024, and 50,000 fewer than originally anticipated. The national average home price is also expected to be lower than initially forecast, settling around $687,898—approximately $30,000 less than earlier predictions.

Market momentum may remain subdued until trade uncertainties are resolved and consumer confidence rebounds—factors that could take months to stabilize.

The Role of a REALTOR® in Times of Uncertainty

Navigating real estate decisions amid fluctuating interest rates can feel overwhelming. This is where working with a REALTOR® becomes especially valuable.

• For Buyers: A REALTOR® can set up tailored property searches, attend open houses on your behalf, and leverage their professional network to uncover off-market opportunities—giving you a competitive edge when timing matters most.

• For Sellers: A REALTOR® can begin preparing and marketing your home right away, from staging advice to gathering key documentation, all while minimizing disruption to your daily life.

With real estate markets closely tied to interest rate trends, having a knowledgeable REALTOR® by your side ensures you're making informed decisions, whether you're buying, selling, or simply planning your next steps.

Bank of Canada Pauses Rate Cuts—How Home Buyers Are Affected