🏦 BoC Monetary Policy Report: Key Mortgage Insights for Fall Buyers

The Bank of Canada’s October 2025 Monetary Policy Report (MPR) offers crucial insights into the direction of the economy, inflation, and — most importantly — mortgage rates. With housing affordability under pressure and inflation easing slowly, fall homebuyers are eager to know what this means for borrowing costs.

Let’s break down the most important takeaways for Canadian mortgage shoppers this fall.

📊 1. Inflation Cooling, But Not Gone

The BoC’s latest report shows that headline inflation has eased to around 2.6%, down from over 3% earlier in the year. Energy prices have stabilized, and supply chain costs continue to normalize.

However, core inflation (excluding food and energy) remains sticky at 2.8%, signaling that the BoC will stay cautious before making large rate cuts.

Mortgage Impact:

• Fixed rates may gradually decrease as bond yields reflect improving inflation trends.

• Variable-rate borrowers may need to wait longer for meaningful relief until the BoC begins cutting its policy rate — likely in early 2026 if data continues improving.

💰 2. Housing Market Still a Major Concern

The report highlights how high mortgage costs continue to suppress homebuyer activity, especially in urban centers like Toronto, Vancouver, and Ottawa. However, a slight rebound in demand is expected if rates begin to ease later this year.

BoC noted:

“Affordability remains strained, but household balance sheets are stabilizing as wage growth outpaces inflation.”

Mortgage Insight:

• First-time buyers should consider locking in a rate hold for up to 120 days.

• Renewing homeowners can explore refinancing or switching lenders to capture future rate drops.

💱 3. Global Rate Cuts Creating Downward Pressure

As other central banks, including the U.S. Federal Reserve and European Central Bank, begin cutting rates, the BoC faces increasing pressure to follow suit. A stronger Canadian dollar could weaken exports if domestic rates remain higher for too long.

Mortgage Outlook:
Expect modest rate reductions in fixed mortgages this fall as global bond markets adjust to worldwide easing.

🏠 4. What Buyers Should Do This Fall

With mixed economic signals, buyers should stay strategic:

✅ Get pre-approved early – Rate holds now protect you if rates fall.
✅ Compare fixed vs variable – Fixed rates offer stability while variable may win longer term.
✅ Work with a mortgage broker – Platforms like RateShop can compare dozens of lenders to find the lowest available rates.

🔍 5. 2025–2026 Forecast: A Gradual Turn

The BoC expects slow but steady economic growth through 2026, allowing room for measured rate cuts. Mortgage rates are likely to trend downward in small increments, improving affordability by early next year.