Interest Rates Could Fall Further: What This Means for Homebuyers and Homeowners in Toronto and Ontario

Canada has managed to avoid a full-blown recession this year, but the economy isn’t out of the woods yet. According to new research from Capital Economics, the country is facing a period of weak economic growth, sluggish consumer spending, and rising unemployment.

The result? Some economists are now forecasting interest rate cuts that go even deeper than what many expected earlier this year. And for homeowners and buyers in Ontario, this could be a key moment to review mortgage strategies.

At MonsterMortgage.ca, we’re here to help you understand what this could mean for your home financing options.

What’s Happening with Interest Rates?

The Bank of Canada made its first rate move in six months in September, cutting its overnight rate to 2.5%, in response to slowing growth and easing inflation pressures.

Most major Canadian banks expect the rate to settle around 2.25% or slightly higher by mid-2026.

However, Capital Economics, a global research firm, believes the rate could go much lower. Their forecast calls for the Bank of Canada to cut rates all the way to 1.75%, starting with another 25-basis-point cut this October and continuing with additional cuts in early 2026.

The key reasons behind this more aggressive forecast include:

• Ongoing U.S. tariff shocks
• Weaker immigration impacting workforce growth
• Consumer spending remaining low
• Unemployment projected to peak at 7.3% in early 2026
• Inflation expected to ease closer to 2% as wage pressure slows and tariffs are rolled back

According to Capital Economics, the Bank of Canada will likely deliver three more 25-basis-point cuts, which could bring rates well below the bank’s estimated neutral range of 2.25% to 3.25%.

What Does This Mean If You’re Buying or Refinancing in Ontario?

These changes in monetary policy could create opportunities for both homebuyers and existing homeowners looking to renew or refinance their mortgage.

If you have a variable-rate mortgage:

You’re most likely to benefit directly from any future rate cuts. For every 25 basis points reduced, you could save around $15 per month per $100,000 borrowed.

If you’re planning to buy a home in Toronto or Ontario:

Lower rates may improve your borrowing power. While housing prices have remained stable in many areas, lower interest rates could reduce your monthly payments and increase affordability.

If you’re renewing or refinancing:

Now may be the time to consult a Toronto mortgage broker. Whether you should lock in a new fixed rate or stay variable will depend on your financial goals, timeline, and risk tolerance. With potential cuts coming over the next few quarters, it may be smart to explore flexible mortgage options.

What’s Next?

The next Bank of Canada interest rate announcement is later this month, and all signs point to at least one more cut in 2025.

That said, the upcoming Federal Budget on November 4 could also influence monetary policy. If Prime Minister Mark Carney follows through with an austerity-focused approach, government job cuts could act as a drag on the economy and encourage the Bank to cut rates further.

However, if the government introduces new fiscal supports instead, the Bank may take a more cautious approach.

What Should You Do Now?

With so much changing in the economic landscape, now is the time to take stock of your mortgage strategy.

Here’s how to stay ahead:

Talk to a Toronto mortgage broker: Whether you’re buying your first home, refinancing, or renewing, we can help you make sense of the latest rate trends and determine the right product for your needs.

Review your current mortgage: If you’re in a variable-rate mortgage, further rate cuts could reduce your payments. If you’re in a fixed-rate mortgage, refinancing might be worth considering as rates fall.

Don’t rush—but don’t wait too long: Timing matters. If more rate cuts are on the horizon, a little patience could save you money. But don’t delay important decisions without a clear plan. A consultation with a mortgage expert can help you weigh the pros and cons.

Final Thoughts

Canada’s economy may have avoided a recession, but it is still facing serious headwinds. The good news is that interest rates may fall further in the months ahead, providing new opportunities for mortgage holders and homebuyers alike.

Whether you’re looking to buy, refinance, or renew, now is a good time to connect with a mortgage broker in Toronto who can help you navigate the changing rate environment with confidence.

At MonsterMortgage.ca, we have over 25 years of experience helping Canadians make smarter mortgage decisions—whatever the market looks like.

📞 Call us today at (647) 503-5349 or Schedule your consultation online