Overview: a look at the Bank of Canada’s September 2025 rate cut, its impact on the GTA housing market, and what it means for buyers, sellers, and mortgage holders.
Our August market report examined the chances of another rate cut in September, putting the odds between 62-70%.
It turns out it was 100%.
On September 17th, the Bank of Canada (BoC) lowered interest rates 25 basis points from 2.75% to 2.5%.
This marks just the third rate cut of the year and the eighth overall since the BoC began its easing campaign last June.
But will it be enough to revitalize the housing market and bring back buyers, sellers and competition?
Let’s find out…
Impact Of September 2025 Rate Cut On Mortgages
Following the BoC’s announcement, Canada’s commercial banks lowered their prime lending rate from 4.95% to 4.70%.
According to Ratehub:
Those most directly impacted by today’s rate cut are those holding variable-rate mortgages because their interest rate is pinned to movement in the Bank of Canada’s overnight lending rate.
Borrowers with variable-rate mortgages (VRMs) will either see their monthly payments drop, or a larger portion go towards paying off their principal.
How much can they save?
Since the average price of a GTA home is $1,079,812, homeowners will save about $162 per month or $1,944 annually.
Those numbers are even higher when combined with previous rate cuts.
For instance, homeowners who were paying about $5,000 a month before the rate cuts began are now paying $3,800.
That works out to a savings of around $1,200 per month, or $14,400 per year!
Other beneficiaries of the rate cut include new buyers applying for their first home loan, those looking to refinance, and Home Equity Line Of Credit (HELOC) holders.
While fixed-rate mortgages (FRMs) are not directly tied to the Bank of Canada’s overnight rate, they are influenced by the bond market, which closely follows BoC policy.
As a result, some lenders have already reduced FRMs from 4.19% to 3.94%.
September 2025 Rate Cut: Home Sales & Prices
Before the September rate reduction, the Toronto Regional Real Estate Board (TRREB) predicted:
Further relief in borrowing costs would see an increased number of buyers move off the sidelines to take advantage of today’s well-supplied market…
While it’s too early to say for sure, lower borrowing costs and ample inventory will likely inspire more buyers to enter the housing market.
We’re already seeing this happen across the country.
Although the GTA experienced a modest 2.3% bump in home sales last month, national home sales hit a 4-year high.
Sales also rose 1.1% for the fifth straight month.
Another reason to expect more housing activity is the fall market, which is famous for adding tons of new supply.
According to the Canadian Real Estate Association (CREA):
Part of what drives sales at different points in the year is the availability of a lot of fresh property listings for buyers to buy. For the fall market, that always happens right at the beginning of September…
For example, year-over-year GTA home sales rose 8.5% last September and 44.4% in October!
And if 2024 is any guide, sales, competition and prices could all pick up in the coming weeks and months, with the recent rate cut adding fuel to the fire.
Advice For Home Buyers
A housing report from RBC explains why now is the time to buy:
Declining ownership costs driven by lower rates and moderating prices in some regions have made homeownership the most affordable it’s been in three years. This trend is expected to continue, encouraging more buyers to act.
Housing affordability is at multi-year highs, putting it in reach of more people.
The GTA is also in a buyer’s market, offering abundant inventory, less competition and the ability to negotiate prices and set conditions.
Other reasons to buy now include:
- Lower interest rates (making monthly mortgage payments more affordable)
- Higher purchasing power (buyers can qualify for bigger mortgages)
- Average home prices falling 5.2% year-over-year
- Plentiful inventory (reducing competition)
However, more buyers are expected to enter the market after the September 2025 rate cut, causing home sales, competition and prices to rise.
Global News agrees:
This most recent rate cut is likely to draw more prospective home buyers out of the woodwork…
However, there’s still time to act.
As of August, 98% of the GTA is in underbidding territory—with homes being sold below asking price.
Neither is this trend limited to any specific property type, with 94% of single-family homes and 97% of condos being underbid throughout the GTA.
In short, buyers who act now can get a discount on all properties—from the cheapest (condos) to the most expensive (houses).
Advice For Home Sellers
The GTA is currently in a buyer’s market with a Sales-to-New-Listings Ratio (SNLR) of 37%, while Toronto’s SNLR of 39% is just 1% from balanced territory.
The September 2025 rate cut will likely push Toronto into balanced conditions and draw the GTA closer to it.
If that happens, sellers will be able to negotiate a fairer deal with buyers.
As mentioned above, home sales typically surge in September and October, making fall an opportune time to list your property.
More buyers are also planning to purchase a home in the next few months.
According to a recent Leger survey, 68% of Canadians are waiting for home prices to drop 5-10% before entering the market.
That’s already happened, with home prices diving 5.2% in August.
But to attract buyers, sellers still have to price their properties competitively.
BNN Bloomberg offers the following advice:
…despite renewed demand, it’s important that sellers price their properties appropriately as the market isn’t yet seeing all-out bidding wars.
To get the best deal possible, sellers should:
- List early (before other sellers flood the market)
- Price strategically (based on a comparative market analysis)
- Offer incentives (e.g. flexible closing dates)
Those who act now can stay ahead of the curve—while those who wait may find themselves facing stiff competition from fellow sellers.
September 2025 Interest Rate Cut Conclusion
Chances are a single quarter-point reduction won’t be enough to lure back most buyers.
But that’s not all they have going for them: there’s also lower prices, ample inventory and lack of competition.
All of those, together with lower rates, may just motivate reluctant buyers to enter the market.
Economists also expect another rate cut at the BoC’s next meeting in October, and potentially one more in December—bringing interest rates down to 2%.
That would be great for both buyers and sellers, providing the former with lower mortgages and more purchasing power, and the latter with more competition and higher prices.
Have questions about the September 2025 rate cut? Contact me below for answers.
Wins Lai
Real Estate Broker
Re/Max Ultimate Realty Inc., Brokerage
m: 416.903.7032 p: 416-530-1080
f: 416-530-4733
a: 836 Dundas St W Toronto, ON M6J 1V5
w: www.winslai.com e: wins@winslai.com