Rate hold means status quo for Canada’s struggling housing market: experts

Real estate watchers say the Bank of Canada's decision to hold its key policy rate steady at 2.75 per cent will likely keep a sluggish housing market at the status quo. A new home is shown for sale in a housing development in Ottawa on Tuesday, July 14, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Real estate watchers say the Bank of Canada’s decision to hold its key policy rate steady at 2.75 per cent will likely keep a sluggish housing market at the status quo.

Wednesday’s announcement marked the first time the central bank has left the benchmark rate unchanged following seven consecutive cuts since June.

Ratesdotca mortgage and real estate expert Victor Tran said the current economic environment is not inspiring consumer confidence in large purchases, such as a mortgage on a home, and the Bank of Canada’s rate hold won’t do much to change that.

“The housing market overall has been sluggish for months, with a spring market that is much more muted than in previous years,” said Tran in a press release.

“This state of the housing market is not likely to change much with this rate hold.”

National home sales had begun picking up late last year after some rate cuts and economists had predicted an uptick in activity throughout 2025 before economic uncertainty caused by the U.S.-Canada trade war put a damper on those hopes.

Penelope Graham, a mortgage expert at Ratehub.ca, noted those with variable-rate mortgages will see no movement to their payments, or the amount that services interest, as a result of Wednesday’s decision.

“Today’s rate hold will do little to re-incentivize homebuyers, who have been increasingly hesitant to enter the market amid tariff uncertainty,” she said.

“In volatile market conditions, it’s a great idea for those shopping for a mortgage or coming up for renewal to seek out a pre-approval to hold today’s rates for up to 120 days. This helps protect against short-term rate fluctuations.”

Tran said housing market activity could pick up if analysts’ forecasts of two more cuts this year materialize, as this would lead to lower variable mortgage rates.

“Though it’s difficult to predict, as purchasing trends will be affected by what’s happening in the broader economy, and we don’t have a clear picture of that yet,” said Tran.

Meanwhile, he said volatility in the bond market has yet to result in significant changes to fixed-rate mortgages, but fixed rates may increase if bond yields continue to rise.

Sammy Hudes, The Canadian Press

This report by The Canadian Press was first published April 16, 2025.