Canada's economy showed real signs of slowing in last quarter. According to Statistics Canada, GDP contracted –1.6% annualized between April and June. This marked the first negative reading in seven quarters (going back to the Covid days). Weak exports, softening business investment, and ongoing trade tensions dragged growth down.
For mortgage holders, this matters because markets are now pricing in a ~50–55% chance of a Bank of Canada rate cut on September 17, 2025. But does that mean your rate will drop? And what should homeowners, buyers, and investors do in response?
Key Insight
This September 2025 Mortgage Market Update breaks it all down.
Canada GDP Q2 2025 chart showing contraction – impact on mortgages and interest rates (Source: Statistics Canada)
GDP fell –1.6% annualized (markets expected closer to –0.6%)
Exports plunged 7.5%, especially autos, machinery, and travel-related industries, hit hard by U.S. tariffs
Business investment slipped for the first time since the pandemic
Domestic demand (household + government spending) rose 0.9%, cushioning the blow
The economy isn't collapsing, but it's showing uneven momentum. And that's the kind of backdrop that puts more pressure on the Bank of Canada to cut rates.
Economic softening typically leads to monetary policy adjustments, affecting mortgage rates across Canada.
Markets now put the odds of a Sept 17 rate cut at roughly 50–55%. That's up from ~40% before the GDP release.
A BoC cut would reduce prime-linked mortgage rates. For variable-rate borrowers, this could mean monthly payment relief in the months ahead.
Don't assume fixed rates will drop just because the BoC cuts. Fixed mortgage rates follow bond yields (and lately, Canadian yields have been reacting more to U.S. Federal Reserve decisions than Ottawa).
Variable-rate clients may see modest relief soon, but fixed-rate borrowers should plan as if current levels will hold steady.
Bank of Canada building with rate cut decision concept – Canadian mortgage update September 2025
Bank of Canada Decision
September 17, 2025
50-55% Cut Odds
If your renewal is coming up in October, November, or December, you've likely started receiving "lock-in early" offers from your lender.
Many lenders are sending inflated renewal quotes months before maturity.
They want borrowers to lock in early because they see the potential for variable rates to drop.
That protects their margins and not necessarily your wallet or best interests.
Secure your rate without committing immediately
Compare multiple lenders to find the best deal
Avoid signing the first offer you receive
Take control of your renewal process
Higher rates + high debt loads = stress for many households. But refinancing can make a huge difference.
Mortgage: $1,904/mo
Debts: $1,978/mo
Total: $3,882/month
New mortgage: $1,203.44/mo (debts rolled in)
Total: $1,203/month
≈ $2,679/month saved
That's over $32,000 annually in breathing room!
With 1–2 prepayments a year, you could knock years off the mortgage timeline while enjoying the monthly breathing room now.
Yes, that's real.
Before and after refinancing monthly payment comparison – mortgage savings example
Contact us for a personalized calculation
For first-time buyers, affordability is still a challenge. New home construction is down drastically and the population is still increasing at high rates.
Consider a duplex, triplex, or fourplex.
Live in one unit, rent out the others.
With as little as 5–10% down (if owner-occupied), you can qualify and use rental income to help cover the mortgage.
After a few years, you may refinance and buy a single-family home, while keeping the multi-unit as an income property.
This helps reduce net housing costs and accelerates wealth-building.
Headlines change daily. Rates rise, fall, and pause. But the fundamentals remain:
Real estate is still one of the best long-term wealth builders in Canada.
Your strategy matters more than any single rate announcement.
The earlier you plan, the more options you'll have.
Whether you're renewing, refinancing, or buying for the first time, reach out.
With this September 2025 Mortgage Market Update, alongside our weekly posts on our socials, we're here to give you clarity and guide you toward the smartest move for your situation.
You know where to find us.