September 17, 2025 Bank of Canada Update
On September 17, 2025, the Bank of Canada cut its policy rate by 25 basis points, bringing the target rate down to 2.5%. That’s now half the 5% peak we saw just over a year ago.
The Bank acted because GDP shrank by about 1.5% in Q2, unemployment has climbed to 7.1%, and inflation dipped under 2% in August. But the release also flagged that food and services inflation remains too hot — so while cuts are happening, don’t expect rates to crash back to zero anytime soon.
For real estate investors, the takeaway is clear: financing conditions are improving, but the market isn’t out of the woods. The opportunity lies in motivated sellers and assets that cash flow today.
Bank of Canada Meeting Schedule
Wondering when the Bank of Canada will make its next move? The BoC announces rate decisions eight times a year. These dates are key for anyone watching interest rates or planning a real estate move.
📌 Next meeting: September 17, 2025 — Markets are pricing in another cut. Stay tuned.
| Announcement Date | Target Rate | Change |
|---|---|---|
| January 24, 2024 | 5.00% | --- |
| March 6, 2024 | 5.00% | --- |
| April 10, 2024 | 5.00% | --- |
| June 5, 2024 | 4.75% | -0.25% |
| July 24, 2024 | 4.5% | -0.25% |
| September 4, 2024 | 4.25% | -0.25% |
| October 23, 2024 | 3.75% | -0.50% |
| December 11, 2024 | 3.25% | -0.50% |
| January 29, 2025 | 3.00% | -0.25% |
| March 12, 2025 | 2.75% | -0.25% |
| April 16, 2025 | 2.75% | --- |
| June 4, 2025 | 2.75% | --- |
| July 30, 2025 | 2.75% | --- |
| September 17, 2025 | 2.50% | -0.25% |
| October 29, 2025 | TBC | TBC |
| December 10, 2025 | TBC | TBC |
Source: Bank of Canada.
Historical Bank of Canada Interest Rates (2015–2025)
Rates don’t move in a straight line. Here’s how Canada’s overnight target rate has shifted over the past decade:
| Year | Start Rate | End Rate |
|---|---|---|
| 2015 | 1.00% | 0.50% |
| 2016 | 0.50% | 0.50% |
| 2017 | 0.50% | 1.00% |
| 2018 | 1.00% | 1.75% |
| 2019 | 1.75% | 1.75% |
| 2020 | 1.75% | 0.25% |
| 2021 | 0.25% | 0.25% |
| 2022 | 0.25% | 4.25% |
| 2023 | 4.25% | 5.00% |
| 2024 | 5.00% | 3.00% |
| 2025 YTD | 3.00% | 2.50% |
Source: Bank of Canada.
Lesson? When inflation or economic growth swings, interest rates follow — fast.
Where Are Interest Rates Going in Canada?
Here’s what Canada’s Big Five banks are predicting for the Bank of Canada’s policy rate:
| Bank | Now | Year-End 2025 | Year-End 2026 |
|---|---|---|---|
| TD (Updated Sep 2025) | 2.50% | 2.25% | 2.25% |
| CIBC (Updated Sep 2025) | 2.50% | 2.25% | 2.25% |
| BMO (Updated Sep 2025) | 2.50% | 2.25% | 2.00% |
| RBC (Updated Sep 2025) | 2.50% | 2.50% | 2.75% |
| Scotia (Updated Sep 2025) | 2.50% | 2.25% | 2.75% |
What Actually Moves Canada’s Interest Rates?
The BoC doesn’t chase headlines — it sticks to the numbers and its 2% inflation target. Here’s what they’re watching right now:
- Inflation: Headline CPI eased to 1.9% in August, but food and services remain hot.
- GDP Growth: The economy shrank by about 1.5% in Q2, with exports down 27%.
- Unemployment: Up to 7.1% in August, with hiring intentions weakening.
- Global Trade & Tariffs: U.S. tariffs continue to weigh on exports and investment.
- Household Spending: Still growing, but slower population growth and weaker labour markets will drag.
With weaker growth and inflation momentum fading, the BoC judged another cut was necessary — and markets expect at least one more before year-end.
General Outlook: At Least One More Rate Cut Likely Ahead
CPI inflation is now sitting at 1.9%, right around the Bank of Canada’s 2% target. Core measures are easing, but food and services remain stubbornly high. That’s why the Bank isn’t rushing rates back to zero — but the overall trend still points lower.
The economy is clearly slowing. GDP contracted by 1.5% in Q2, exports fell sharply, and unemployment has climbed to 7.1%. Business investment is weak, and household spending is expected to soften as job growth stalls. On the global front, U.S. tariffs continue to weigh on trade, and a stronger Canadian dollar is making exports less competitive.
Bottom line? With growth cooling and inflation momentum fading, markets are betting on at least one more cut before the end of 2025 — likely in October or December. And history tells us something important: rate cuts rarely come alone. Once the Bank starts easing, it often follows through with a pair of moves.
How This Impacts Toronto Real Estate
While national headlines highlight weak sales and soft prices, Toronto’s freehold market — especially multiplexes — continues to hold steady.
Here’s why:
- Motivated sellers are still rare. Lenders are working with owners, keeping forced sales low.
- Multiplex inventory remains tight. Demand for income-generating properties outpaces supply.
- Policy changes support multi-units. New zoning rules and better financing options make multiplexes more attractive.
- High construction costs create a floor. It’s still expensive to build new, which keeps resale multiplexes in demand.
- Rate cuts improve cash flow. Even small drops in borrowing costs make a noticeable difference on multiplex returns.
Bottom line: condos may be oversupplied, but multiplexes are positioned as the most resilient Toronto asset class in this cycle.
Deal of the Week: Turnkey Triplex Opportunity
Here’s what real numbers look like right now:
- Purchase price: $950,000
- Capital needed (20% down + closing): ~$200,000
- Rents from 3 legal units: ~$6,200/month
- Monthly cash flow after expenses: ~$1,200
- Cash-on-cash return (year 1): ~7%
- Income return with mortgage paydown included: ~13%
This is a fully turnkey triplex — no renos needed, positive cash flow from day one. And if you decide to expand later, topping up the garage with a garden suite unlocks even more rental income and future upside.
Mortgage Rate Estimates (September 2025)
If you’re planning to buy or refinance, here’s a quick cheat sheet:
| Product | Estimate |
|---|---|
| 3-Year Fixed Rate | 3-Year Bond yield + 1.5% |
| Prime Rate | Bank of Canada rate + 2.2% |
| Variable Mortgage Rate | Prime – 1% |
| HELOC Rate | Prime + 0% to 2% |
Cuts for fixed rates are already priced in, so the impact of new moves won’t be dramatic. Fixed rates usually drop first in a falling rate environment because they’re tied to bond yields, which anticipate cuts. Variable rates adjust only after the Bank of Canada makes its decision.
Example — September 2025:
- 3-year bond yield: ~2.5% → Fixed mortgage rates: ~4.0%
- Bank of Canada rate: 2.5% → Prime rate: ~4.7% → Variable mortgage rates: ~3.7%
Free Mortgage Calculator
Want to see how a rate change affects your monthly payment? Helpful if you’re house hunting, refinancing, or planning a top-up.
Expert Tip: Fixed vs. Variable in 2025
For the first time in years, variable rates are now dipping below fixed — and that’s actually the normal state of things. The unusual stretch we just went through, where fixed was cheaper, was never how the market typically works.
Think of fixed rates as insurance: you pay a premium for stability and peace of mind. Variable rates come with more risk, but they usually cost less — and with cuts underway, they now offer the bigger savings potential.
Bottom line: if you want certainty, go fixed. If you want lower costs and can handle some bumps along the way, go variable.
What Should Real Estate Investors Focus On Right Now?
This isn’t the time to bet on price appreciation. Instead, smart investors are focused on:
- ✅ Strong cash flow from day one
- ✅ Legal multi-units in stable, working-class areas
- ✅ Properties with laneway/garden suite potential
- ✅ Smart use of leverage while rates are easing
- ✅ Flexibility to refinance or exit
Final Word: The Interest Rate Forecast Favouring Investors
Interest rates are likely headed lower in 2025, and possibly 2026. That opens the door to stronger cash flow, better refinance options, and smarter scaling for long-term investors.
The Toronto multiplex market remains one of the most resilient in the country — and with the right strategy, you don’t need to wait for the market to tell you when to act.
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What Toronto Real Estate Investment Is Right For You?
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