The Bank of Canada announced today that it will hold its key overnight rate steady at 2.75%, pausing after seven consecutive rate cuts since last June. This decision comes at a time of heightened economic uncertainty, largely driven by the ongoing US-Canada trade war and its ripple effects on consumer confidence and financial markets. For Toronto’s housing market, this rate announcement signals a continuation of the status quo, at least for now.

Toronto’s housing market has been sluggish for months, with this year’s spring market notably more muted than in previous years. Despite earlier rate cuts, the hoped-for resurgence in home sales has not materialized. In fact, home sales in the Greater Toronto Area (GTA) declined by nearly 24% year-over-year in March 2025, even as active listings soared to their highest March level in 16 years. Prices have also softened, with the average home price in the GTA down 2.5% year-over-year to $1,093,254, and benchmark prices down 3.8%.

Why the Rate Hold?

The Bank of Canada’s decision to pause rate changes reflects its cautious approach amid significant uncertainty. The central bank is closely watching the evolving US trade policy, which has already dampened both business and consumer confidence in Canada. Two possible scenarios were outlined: a short-lived trade dispute with limited economic damage, or a prolonged trade war that could push Canada into recession and drive inflation higher. Until there is more clarity on these risks, the Bank is opting for stability.

What Does This Mean for Toronto Buyers and Sellers?

• Buyers: The rate hold means no immediate relief for those with variable-rate mortgages, and little incentive for new buyers to jump into the market. Fixed mortgage rates, which are influenced by bond yields, have yet to see significant downward movement, and could even rise if bond yields increase. With ample inventory and cautious demand, buyers will continue to enjoy more negotiating power and longer time to make decisions.

• Sellers: The surge in active listings (up 88% year-over-year) means more competition among sellers. Properties are taking longer to sell, and price negotiations are common. Motivated sellers may need to adjust expectations or consider price reductions to attract buyers.

What Could Change the Outlook?

Many economists argue that the Bank of Canada will need to cut rates further to reignite housing activity and support economic growth. If the central bank delivers on forecasts of additional rate cuts later this year, lower borrowing costs could entice more buyers back into the market. However, much depends on the broader economic picture, particularly the trajectory of the US-Canada trade dispute and its impact on jobs and consumer sentiment.

Advice for Homeowners and Prospective Buyers

In these uncertain times, those shopping for a mortgage or approaching renewal should consider seeking pre-approval to lock in current rates for up to 120 days, providing some protection against potential rate fluctuations. For sellers, pricing competitively and preparing for longer selling times will be key.

Today’s Bank of Canada rate hold is a signal to Toronto’s housing market to stay the course, for now. With economic uncertainty looming and the market firmly in buyers’ territory, both buyers and sellers should remain cautious and informed. At Zown, we’re here to help you navigate these changing conditions with expert guidance and up-to-date market insights.

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