Wondering where interest rates are headed in Canada?
Here’s your latest Canada interest rate forecast summary — simplified, clear, and focused on what it actually means for Toronto real estate investors.
June 2025 Bank of Canada Update
The Bank of Canada held its key interest rate at 2.75% during the June announcement. This wasn’t a surprise — Q1 GDP came in stronger than expected, and core inflation is still hovering just above 2%.
But under the surface, signs of an economic slowdown are building — and that’s exactly why most economists think rate cuts are still on the table for 2025.
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: July 24, 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 | TBC | TBC |
| September 17, 2025 | TBC | TBC |
| 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% | 2.75% |
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 | Sep 2025 | Year-End 2025 | Year-End 2026 |
|---|---|---|---|---|
| TD | 2.75% | 2.25% | 2.25% | 2.25% |
| CIBC | 2.75% | 2.25% | 2.25% | 2.25% |
| BMO | 2.75% | 2.50% | 2.25% | 2.00% |
| RBC | 2.75% | 2.25% | 2.25% | 2.50% |
| Scotiabank | 2.75% | 2.75% | 2.75% | 2.25% |
Source: Bank of Canada, TD, CIBC, BMO, RBC, Scotiabank. Last updated June 16, 2025.
What Actually Moves Canada’s Interest Rates?
If you’re wondering why the Bank of Canada changes rates, here’s the short version:
- Inflation: BoC aims to keep it near 2%
- GDP Growth: Weak growth = more cuts
- Unemployment Trends: Higher unemployment pressures cuts
- Global Conditions: U.S. Fed moves, oil prices, trade
- Government Spending & Policy
The Bank of Canada doesn’t care about headlines. It moves rates to hit its inflation target while keeping the economy stable.
Summary: Most Banks Expect Rate Cuts in 2025
- Core inflation is easing — now trending between 2–3%
- GDP growth is expected to slow in Q2 and Q3
- Markets are pricing in a 90%+ chance of a rate cut by July
- Lower rates = better borrowing terms and potential market activity boost
RBC Thinks the Cutting Cycle Is Done
RBC stands out as the most cautious. They think the BoC may be done cutting this cycle (they haven’t updated on their official forecasts yet). Their reasoning:
- U.S. trade conditions have improved
- Consumer spending in Canada remains resilient
- Recession fears have faded
- Federal stimulus may reduce the need for further monetary easing
How This Impacts Toronto Real Estate
While national headlines focus on weak sales and prices, Toronto houses is holding steady — especially in the multiplex segment.
Here’s Why:
- Motivated sellers are rare (banks remain flexible)
- Multiplex inventory is tight
- Zoning changes and financing improvements are helping multi-unit homes stand out
- Construction costs are high, so resale inventory remains in demand
Mortgage Rate Estimates (June 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% to 1.5% |
| Prime Rate | Bank of Canada rate + 2.2% to 2.35% |
| Variable Mortgage Rate | Prime – 0.5% to 1% |
| HELOC Rate | Prime + 0% to 2% |
📌 Fixed rates usually move first based on bond yields. Variable rates follow when the BoC officially changes its policy rate.
Example — June 2025:
- 3-year bond yield: ~2.8% → Fixed rate: ~3.8% to 4.3%
- BoC rate: 2.75% → Prime: 4.95% → Variable: ~4% to 4.45%
Fixed rates usually drop first in a falling rate environment—they’re based on bond yields, which move in anticipation of rate cuts. Variable rates follow after the Bank of Canada actually lowers its policy rate.
Right now, both fixed and variable rates are converging, landing in roughly the same range.
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
We get asked this all the time: Should I lock in now, or go variable?
- Go Fixed if you want peace of mind or plan to hold the mortgage for 5+ years.
- Go Variable if you want to ride future rate drops — just be ready for bumps.
📌 Rates are finally close enough that this decision now comes down to risk tolerance, not savings.
How Interest Rates Affect Toronto Real Estate
Toronto real estate hasn’t followed the national narrative. While Toronto condo prices remain weak, Toronto freehold home prices have held steady for over 3 years now. Why?
- Sellers aren’t distressed (thanks to lender flexibility)
- Supply for multiplexes and family homes is still tight
- Construction costs are high — putting a floor under resale prices
Meanwhile, lower rates mean stronger cash flows and better financing terms for investors.
Here's How A Top Investment Property In Toronto Looks Like Today
Here’s what real numbers look like right now:
- Purchase price: $1,049,000
- Capital needed (20% down + closing): ~$250,000
- Rents from 3 legal units: ~$7,400/month
- Monthly cash flow after expenses: ~$2,300
- Cash-on-cash return (year 1): ~11%
- Income return against mortgage paydown and closing costs: ~17.3%
This is without renovations or tenant turnover. Just a clean, turnkey asset.
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.
Want to See What You Can Buy Today?
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What Toronto Real Estate Investment Is Right For You?
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