Despite earlier predictions of additional rate cuts, the Bank of Canada has opted to keep its policy interest rate steady at 2.75%, with the prime lending Rate remaining at 4.95%. This marks the third consecutive time the bank has held its rate, signalling a cautious approach in today’s complex economic environment.
Why did the bank decide to hold?
Let’s take a closer look at the factors behind this decision. While there has been some progress in U.S. trade discussions, the policy landscape remains uncertain, with potential sector-specific tariffs still a possibility. Rather than releasing a traditional forecast for GDP and inflation, the Bank of Canada introduced three possible scenarios related to tariffs. They include the continuation of current tariffs, escalation of tariffs, and de-escalation of tariffs.
Although global trade-war tensions have eased somewhat, significant uncertainties remain. The bank indicated that if economic conditions weaken enough to slow inflation and reduce trade-related price pressures, a rate cut could still be on the table.
What’s happening in the Alberta housing market?
- Population Growth: Alberta is projected to welcome approximately 122,400 new residents over the next two years—a 2.5% increase—bringing its population close to 5.1 million by 2027.
- Home Prices: The average home price in 2025 is expected to reach $509,000, up 2.3% from 2024.
- Housing Starts: Despite population growth, new housing starts are forecast to decline by 5% to around 45,400 units in 2025.
This paints a picture of stability mixed with fragility: demand and prices are rising, but supply is slowing. If you are an Albertan who currently owns a home, you may be well-positioned to tap into your home equity for refinancing. For buyers, it’s a competitive market where being pre-approved, knowing your budget, and acting quickly on suitable homes can make all the difference.
What’s happening in the British Columbia housing market?
- Home Prices: Average home prices in B.C. are expected to decline about 7.1% in the first half of 2025, driven by increased inventory and weakening demand due to rising unemployment, population decline, and market uncertainty.
- Smaller price declines are forecast for Q3 and Q4 of 2025, with a gradual recovery beginning in early 2026 as the broader economy improves. By 2028, home prices are projected to surpass end-2024 levels.
- Population Growth: Despite affordability challenges, B.C.’s major cities continue to attract working professionals due to thriving tech sectors, urban amenities, and natural surroundings.
- Housing Starts: Declined during the recession but are expected to recover beginning mid-2026, supported by provincial and federal government incentives, tax breaks, and new funding aimed at increasing housing supply.
If you’re wondering how these developments impact your mortgage strategy, whether you’re buying, renewing, or simply monitoring the market, I’m here to help you navigate your options.
The next Bank of Canada rate announcement is scheduled for September 17, 2025. For more details, you can visit the Bank of Canada’s official website.
