🏡 October 2025 Mortgage Rate Forecast: Are Rate Cuts Finally Here?

Blog Post

As fall 2025 begins, Canadian homebuyers and homeowners are closely watching the Bank of Canada’s next move. After more than a year of elevated borrowing costs, signs point toward potential rate cuts that could finally bring relief to the housing market.

Where Mortgage Rates Stand in October 2025

As of this month, 5-year fixed mortgage rates across major lenders are averaging between 4.79% and 5.29%, while variable rates remain slightly lower but riskier, hovering near 4.60%.
With inflation trending closer to the 2% target, economists believe the Bank of Canada may cut its policy rate before year-end — possibly as early as December.

What This Means for Borrowers

If rate cuts occur, homeowners renewing this fall or winter could see improved affordability. However, mortgage experts warn that lenders may not lower rates immediately, as bond yields and market conditions still play a major role in pricing.
For new buyers, locking in a short-term fixed mortgage or considering a variable rate could offer flexibility as rates shift.

Fixed vs Variable: What’s Changing This Fall

In previous years, fixed-rate mortgages dominated due to rising rates. But in fall 2025, variable-rate options are gaining traction again, especially among borrowers expecting gradual rate declines through 2026.
Hybrid mortgages — combining fixed and variable portions — are also becoming a popular middle-ground choice.

Outlook for the Rest of 2025

The mortgage landscape is cautiously optimistic. With economic growth slowing and housing activity stabilizing, rate stability is expected for the next few months. Any BoC policy change in late 2025 could spark a new wave of refinancing and first-time buyer activity.