Bank of Canada Rate Hold: 3 Reasons for Optimism

The Bank of Canada announced today that it would be leaving its overnight rate unchanged at 2.75%, citing economic uncertainty and inflationary risk.

Home buyers might feel disappointed by the bank’s rate-hold decision, but it shouldn’t overshadow the many factors working in their favour: approachable Interest rates, rising housing inventory, lower inflation and the muted impact of Donald Trump’s tariffs.

Here are three reasons why home buying might rebound in the coming months, even without a Bank of Canada rate cut.

1. Rates are shrinking toward long-term averages

The Bank’s rate-hold means variable mortgage rates will remain unchanged until at least June 4, when the next overnight rate announcement will be delivered.

The lowest variable rates are around 4% today. That’s about 0.7% higher than the average variable rate of 3.23% Canadians enjoyed between 2013 and 2023 — not a colossal difference.

Financial anxiety might be higher now among home buyers than it was during most of that 10-year period, but rates are rates. If you’re confident your job and income are secure for the foreseeable future, today’s rates might not be such an impediment.

In many cases, fixed mortgage rates have slid well below 4%, too. Some brokers are offering three-year fixed rates for 3.69% and five-year fixed rates for 3.74%. There’s still quite a gap between these rates and recent historical averages, but the days of sub-3% fixed rates are likely over.

Home buyers have to adjust to this new reality, and they may need do it soon if they want to take advantage of the number of listings piling up on the MLS. With inventory rising and rates ticking down, buyers are in a relatively strong position.

Find the Best 5-Year Fixed Mortgage Rates

Browse Current Mortgage Rates

Compare Variable Mortgage Rates

2. Demand persists

It may feel like Donald Trump’s tariff war has Canadian housing in the dumps, but things aren’t as bad as they seem.

Resale activity was down 9.3% year-over-year in March, according to the Canadian Real Estate Association, while housing starts in areas with populations of 10,000 or more plunged 12.5% over the same period, per the Canada Mortgage and Housing Corporation.

Those are some ugly numbers. But it’s not as if demand has cratered across the country:

In B.C., more homes sold in March than in any month since October 2024.
In Alberta, the 6% decline in sales over the first quarter of 2025 was driven by just two cities, Calgary and Medicine Hat. All others saw an increase.
In Quebec, Q1 sales were 14% higher than a year before; in Newfoundland they were up 19.3%.
Almost 500 more homes sold in Saskatchewan in March compared to January.

April’s sales figures are almost certain to be worse, but Canadians have clearly not abandoned the idea of buying a home. Almost 38,000 of them got into the market in March, when tariff anxiety was ramping up, and more will as conditions improve.

Home buyers are challenged more by high living costs than they are by tariffs, anyway. NerdWallet’s 2025 Canadian Home Buyer Report found that the cost of living was an obstacle to homeownership for 38% of non-homeowners and 26% of homeowners, while the current economic climate, including tariffs, was an obstacle for 13% of non-homeowners and 11% of homeowners.

If those living costs fall — which they did in March, according to the most recent Consumer Price Index from Statistics Canada — it’s conceivable, if not inevitable, that more Canadians will feel safe taking on a mortgage. Retaliatory tariffs won’t help, but significantly lower gas prices might.

3. Buyers may tune out the chaos

The prevailing theory is that Canadians are putting their home buying ambitions on hold because of the uncertainty caused by U.S. tariffs. Fair enough.

But America’s trade war has been a series of misfires so far. After the stock market convulsed and investors began offloading U.S. bonds, Trump’s “reciprocal” tariffs were paused for 90 days. The president has also floated the idea of pausing the tariffs he placed on Canadian-made automobiles.

Because of the on again/off again nature of the tariffs, they’ve yet to have a noticeable effect on the Canadian economy. Unemployment increased 0.1% in March, but only 0.7% of Canadians who became unemployed were subject to a layoff. Annual inflation in March was 2.3% versus 2.6% in February.

If tariffs fail to turn the country upside down, or are rescinded, it’s just a matter of time before some Canadians say, “Enough of this nonsense,” and get back to planning their future as homeowners.

Home buying activity in the coming months will depend largely on how Canadians view the country’s near-term economic future. Some might see the sky as dark and stormy, others might note that it isn’t falling.

The more Canadians that adopt the second perspective, the more hope there’ll be for the housing market.