On July 30, 2025, the Bank of Canada held its overnight lending rate steady at 2.75% for the third consecutive meeting. While this decision signals a pause in rate hikes, it brings both relief and uncertainty to Canadian homeowners, buyers, and investors.

So, what does this mean for the real estate market in Canada—and how will it impact mortgage renewals and first-time buyers?

Read the full announcement here from the Bank of Canada

🧭 1. Real Estate Market Outlook: Stabilizing, But Still in a Holding Pattern

The central bank’s decision to pause rate changes comes as inflation shows signs of softening and the Canadian economy slows down. However, experts warn that interest rates are likely to remain elevated for a while.

🔎 CIBC economist Benjamin Tal notes that the real challenge isn’t just rates—it’s consumer mindset. Buyers and sellers are waiting for “the perfect moment,” causing many local markets to stall.

Despite this, demand remains strong in urban centers like Vancouver and Toronto, where limited supply continues to support prices over the long term.

📊 According to TD Economics, we could see a modest recovery in sales by 2026, especially if future rate cuts occur as predicted.

🔁 2. Mortgage Renewals: Higher Payments Ahead

For those renewing their mortgages in 2025–2026, brace yourself:
According to the Bank of Canada, about 60% of borrowers with five-year fixed mortgages will face a 10–20% increase in monthly payments upon renewal.

💡 Read the Bank’s staff report here

What to Expect:

• Fixed-rate mortgage holders: Likely to face higher rates at renewal due to elevated bond yields.

• Variable-rate mortgage holders: No immediate change in monthly payments, but sentiment around future cuts is uncertain.

• Stress-tested buyers: May find their household budgets stretched thinner than before.

In short, renewals in today’s higher-rate environment could be a financial shock—especially for households that took on large mortgages in 2020–2021 when rates were historically low.

🏠 3. First-Time Home Buyers: Mixed Blessings

For first-time buyers, this rate hold creates a double-edged sword:

✅ Good news:

• Rates didn’t go higher, which helps with qualifying for a mortgage under the stress test.

• A slower market means less competition and more room to negotiate.

🚫 Challenges:

• Affordability is still tough. With borrowing costs significantly higher than just a few years ago, many are adjusting their price expectations.

• First-time buyers must now qualify at roughly 5.25–6.00%, depending on the lender and product.

📉 According to MoneySense, the rate hold doesn’t move the needle much, but future cuts could offer hope—if income growth and affordability improve in 2026.

💬 Final Thoughts

While the Bank of Canada’s July 2025 decision to keep interest rates steady at 2.75% brings a sense of stability, the broader housing market remains in a transition period.

• Mortgage holders should prepare for sticker shock at renewal

• Buyers, especially first-time ones, need to stay patient and strategic

• Sellers should adjust expectations in a slower, rate-sensitive market

🎯 As always, connect with a trusted mortgage advisor or REALTOR® to discuss how the latest policy changes could impact your personal real estate journey.

📌 Useful Links

• Bank of Canada Rate Announcement – July 2025

• Bank of Canada Staff Analysis on Renewals

• TD’s 2025–2026 Canada Housing Forecast

• MoneySense Mortgage Breakdown