In exciting news for current homeowners and aspiring buyers, the Bank of Canada announced on September 17, 2025, that it is lowering its key interest rate by 0.25%, bringing it down to 2.50%.
This is a significant development in the Canadian financial landscape, and at DLC National Ltd, we want to break down exactly what this means for you and your mortgage.
Why Did the Bank of Canada Lower the Rate?
The Bank of Canada’s primary role is to keep the economy stable and inflation in check. According to their recent announcement, this rate cut was made to “better balance the risks” in the economy. With a weaker economy and less upward pressure on inflation, the Bank judged that a reduction in the policy rate was appropriate. In simpler terms, this move is designed to make borrowing cheaper, which in turn encourages spending and investment to help stimulate economic growth.
What This Means for Different Mortgage Holders
The impact of this rate drop depends on the type of mortgage you have or are considering.
For Variable-Rate Mortgage Holders
If you have a variable-rate mortgage or a home equity line of credit (HELOC), this is great news! Your interest rate is tied directly to your lender’s prime rate, which almost always moves in tandem with the Bank of Canada’s key rate.
You can expect to see your lender lower their prime rate in the coming days, which will result in:
- Lower Interest Payments: A larger portion of your regular payment will now go towards paying down your principal balance, helping you build equity faster and pay off your mortgage sooner.
- Reduced Interest Costs: Over the remainder of your term, you will pay less in interest, saving you a significant amount of money.
For Fixed-Rate Mortgage Holders
If you currently have a fixed-rate mortgage, this announcement will not change your existing mortgage rate or payment. Your rate is locked in for the duration of your term, providing you with stability and predictability, regardless of what the market does.
However, this rate cut is still relevant to you if:
- Your Mortgage is Nearing Renewal: If your mortgage term is ending in the next few months, this rate drop is excellent news. It will likely lead to lower fixed rates being offered when it’s time to renew, potentially saving you a substantial amount on your new term.
- You Are Considering Refinancing: If you have been thinking about refinancing to consolidate debt or access your home’s equity, this could be the perfect time. Lower rates mean you could get a better deal on a new mortgage.
For Aspiring Home Buyers
If you are looking to enter the real estate market, this rate cut is a welcome development. Lower rates mean increased borrowing power and more affordable monthly mortgage payments. This could be the catalyst that helps you qualify for the home you’ve been dreaming of.
With borrowing costs decreasing, we may see more buyers entering the market, which could stimulate housing activity. Getting a pre-approval now is a smart move to lock in a favorable rate while you shop for your perfect home.
What Should You Do Next?
Whether you’re a current homeowner or a prospective buyer, this is an opportune moment to review your mortgage strategy.
- Variable-Rate Holders: Enjoy the savings, and let’s discuss if this is the right long-term strategy for you.
- Fixed-Rate Holders Nearing Renewal: Don’t just sign your lender’s renewal offer! Let us shop the market for you to ensure you get the absolute best rate available.
- Aspiring Home Buyers: Now is the time to get pre-approved. Let’s talk about how this rate drop impacts your budget and get you ready to make a confident offer.
The mortgage landscape is constantly changing, but at DLC National Ltd, our job is to help you navigate it with confidence.
Contact us today for a free, no-obligation review of your mortgage options. Let’s make this rate drop work for you!