As we usher in the new year, I’d like to wish you and your loved ones a Happy New Year, filled with health, happiness, and prosperity.
With 2024 behind us, let’s take a moment to reflect on the trends that shaped Canada’s real estate and mortgage markets and explore what 2025 might hold.
2024 recap: a year of recovery and fresh opportunities
If 2023 was about resilience, 2024 was about recovery and moving forward. The Bank of Canada finally shifted to cutting rates and delivered five consecutive rate cuts, reducing its policy rate from a high of 5.00% to 3.25%. This brought prime—used for pricing variable, adjustable, and line of credit products—from 7.20% to 5.45% with most lenders. This was a welcome change for many borrowers and is now starting to provide Canada’s housing market with a much-needed boost.
Inflation also made great strides, dropping to 2.0% by November from a peak of 8.1% in mid-2022. That helped ease the financial strain on households and is helping to bring a sense of stability back to day-to-day budgeting.
2024 also saw sweeping regulatory and government changes aimed at easing housing affordability and supporting buyers. Notable developments included an increase in the cap for insured mortgages, the introduction of 30-year amortizations for first-time buyers, and federal programs to encourage secondary suite development. The government also made adjustments to the foreign buyer ban and introduced a GST exemption for new rental builds. Additionally, Canada’s banking regulator removed the stress test for uninsured mortgage switches, further supporting select borrowers.
The housing market saw renewed activity in 2024, driven by falling interest rates for both variable and fixed mortgages. As borrowing costs eased and consumer confidence in the market improved, more buyers returned to the market, sparking a modest rebound in home prices. According to the Canadian Real Estate Association (CREA), national home prices were expected to end 2024 about 0.9% higher than the previous year.
Looking ahead to 2025: steady progress on the horizon
As we step into 2025, the outlook is cautiously optimistic. Economists anticipate a couple more quarter-point rate cuts from the Bank of Canada before it slows its easing cycle and likely pauses by the second half of the year. Current forecasts from major bank economists suggest the policy rate could fall anywhere between another 25 to 125 basis points, depending on inflation and broader economic trends.
The housing market is expected to stay active, with steady sales growth and modest price increases. CREA forecasts national home sales to climb a further 6.6% in 2025 as interest rates continue to decline and demand flows back off the sidelines. The national average home price is forecasted to rise by 4.4% this year, reaching approximately $713,375
Additionally, potential future regulatory adjustments, including expanded affordability measures, could influence market activity later in the year.
Here to guide you through 2025
Whether you’re planning to buy, renew, or refinance this year, I’m here to help. Let’s review your options and create a plan that works for you—whether that’s securing the best rate, finding the right product, or simply answering your questions.
Let’s make 2025 a year of progress and success. Reach out anytime—I’d love to hear from you!