On December 10th in what was an expected decision by the Bank of Canada, we saw the BOC hold its key overnight rate at 2.25%, a move most economists expected heading into the final rate decision for 2025. In fact the BOC is predicted to leave rates as is, well into the 4th quarter of 2026. With inflation now hovering close to the Bank’s 2% target, and according to Governor Tiff Macklem, the decision was a reflection of a more balanced economic environment, rates should remain where they are for sometime to come.
This is big news for real estate. Why? We are finally starting to see some certainty when it comes to borrowing cost.
Over the past year, many buyers stayed on the sidelines waiting for “one more cut” or “lower rates”. At the same time, sellers hesitated, worried that listing too early might mean selling at “the bottom of the market”. This unfortunately created a tug-of-war that slowed everything down.
Moving forward the bank of Canada has said it expects is a more “balanced market” a feeling that resonates with many economist.
What did we learn as we closed the 4th quarter?
Sales activity has been improving—but cautiously.
October sales: 40,423 homes sold across Canada
Up 0.9% from September
Still 4.3% below October 2024
New listings fell 1.4% month-over-month
Although Rates Matter, Confidence Matters More.
After almost 1 year of job uncertainty and Tarif talk we are starting to see less of it in the headlines. Maybe we are being naive about the future but it seems the economy and overall thinking has settled down.
A recent Scotiabank survey showed 62% of prospective buyers feel economic uncertainty is delaying their plans. That hesitation is something I see every week in conversations with clients—buyers and sellers alike.
People aren’t just asking “Can I afford this?”
They’re asking “Is now the right time to move my life forward?”
Mortgage Choices:
As we saw rates drop throughout 2025, our mortgage choices also changed. We saw a jump in consumers choosing variable rate mortgages to 25% of market share and fixed rates under 3.9% for the first time in a number of years.
Variable Rates
Variable rates: ~3.40%–3.45%
Lower upfront
More exposure to future changes
Fixed Rates
5-year fixed rates: ~3.89%
Predictable payments
Still very competitive historically
My observation:
This rate hold doesn’t flip a switch but it removes a major excuse to wait.
Buyers now know borrowing costs are unlikely to meaningfully improve in the near term.
Sellers are increasingly accepting that peak pricing is behind us.
That clarity alone can restart conversations.
We may see more deals, more listings, and more realistic negotiations but that does not mean higher prices.
To quote the French Philosopher Voltaire “Doubt is not a pleasant condition, but certainty is an absurd one”.
And honestly, after the past few years, a calmer, more balanced market might be exactly what Toronto needs.
—
Brandt J. Morris
The Morris Code | Live. Buy. It.
