june-2025-bank-of-canada-interest-rate-prediction
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June 2025 Bank of Canada Interest Rate Prediction

ByRose Ho

With the Bank of Canada set to announce its latest overnight interest rate on Wednesday, June 4, we anticipated a rate hold for the second time this year.

Canada’s economic situation can be seen as currently too complicated for the Bank of Canada to increase or decrease its rate, thus potentially adding more confusion to the mix. This is due to ongoing trade uncertainty, fuelled by U.S. tariff decisions (or indecisions), and general economic turmoil.

Meanwhile, unexpectedly high GDP performance (2.2% annualized) in the first quarter of the year, which may be attributed to a rush of pre-tariff spending on the other side of the border, is acting as a counter to falling inflation (1.7% in April) and growing recession fears. Therefore, the policy rate will likely remain the same as the Bank waits for further indications as to which way the market is turning.

2025 Interest Rate Announcements to Date

Date Rate Change
January 29 3.00% -0.25%
March 12 2.75% -0.25%
April 16 2.75% No change
June 4 (prediction) 2.75% No change

This predicted pause aligns with the Bank’s slow and conservative pace regarding interest rate decisions, as it aims to protect the Canadian economy from dramatic shifts. The overnight interest rate can be used to spur or dampen economic activity to balance inflation against GDP growth, but with so many factors moving in so many different directions, it makes sense for the Bank to stall for time.

Rate change or not, all of this directly impacts the real estate market, from potential home buyers to current homeowners. So, what can Canadian consumers anticipate?

What Does This Mean For Real Estate?

With borrowing rates exactly the same as they have been since April, we can expect this to prolong the current state of the real estate market for a short period. Encouragingly, mortgage rates are still lower than they were just a year ago, which is great news for first-time home buyers! Realistically, hesitant buyers may continue to wait on the sidelines, hoping for a rate drop later in the year, which will result in a flood of buyers itching to join the housing ladder at the same time.

However, prospective homeowners should seize the window of opportunity now while property prices and buyer competition are low and housing inventory and selection are high. Sparse sales activity since 2024 means that future home construction and completions are shrinking, so there will be a severe lack of supply in a few short years.

The GTA anticipates less than 40,000 new homes added to the market by the end of 2025, which is set to drop to less than 20,000 new homes in 2026 and 2027, and slip further to less than 10,000 in 2028. At that time, prices will skyrocket again as today’s fearful buyers find themselves competing for the little that is available.

Make your move today! First-time home buyers have the advantage right now: increased affordability, government incentives, lots of selection, and little competition. Don’t miss your chance to own your dream home. Call Stan at 604-202-1412

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