by Beatriz Ferreira | Sept 19, 2025
After the Bank of Canada announced interest rate cuts, some experts are saying now is a good time for first-time homebuyers to enter the market in Toronto.
Some experts are saying now is the time for Millennials and GenZ to buy their first home, after the Bank of Canada announced a 25-point interest rate cut.
On Wednesday, Sept 17th, the Bank of Canada lowered its key interest rate from 2.75 per cent to 2.5 per cent, marking the first time the bank made a cut since March. This is also the first time since July 2022 that the interest rate has been 2.5 per cent.
The decision comes as there’s a widespread slowdown in global economic growth, linked to higher tariffs imposed by the U.S. President Donald Trump, political and economic uncertainty, and changes in trade relationships, according to the bank.
The slowdown in economic growth comes as Canada is seeing a concerning decline in employment, which is affecting youth especially. Since January, unemployment went up by 0.6 per cent, reaching 7.1 per cent in August, and 17.9 per cent for youth between 18 to 24 years old, according to Statistics Canada.
In Ontario, the unemployment rate is even greater than the national average, falling 0.2 points to 7.7 per cent in August, with 26,000 less jobs than in July.
In addition, the central bank also anticipates that the average household consumption will go down in the near future.
“The bank will continue to assess the risks, look over a shorter horizon than usual and be ready to respond to new information,” Bank of Canada Governor Tiff Macklem said to reporters on Wednesday.
WHAT DOES THIS MEAN FOR HOUSING?
With the latest interest rate cut, mortgage rates, in turn, have reached their lowest levels so far this year. The average five-year mortgage rates were at 3.74 per cent in April, but now rates available are standing at 3.7 per cent, according to real estate listings website Zoocasa.
Meanwhile, the housing market appears to be picking up after having a significant slowdown earlier this year.
Last month, The Canadian Real Estate Association (CREA) registered the best August market in four years across the country, with a 2.6 per cent increase in supply and new listings outpacing sales.
In Toronto, home sales went up by 2.3 per cent in comparison to last August, while new listings grew by 9.4 per cent with 14,038 new listings in the market, according to the Toronto Regional Real Estate Board (TRREB).
GTA-based realtor Bethany King says more supply and lower rates could represent a better chance for first-time buyers to join the market, giving them more room to negotiate.
“For the first time in maybe about 10 years, we are in an actual buyer’s market, which is very rare for Canada, Ontario, and the City of Toronto. So, I think it’s very positive, and any prudent and savvy buyer will take this as an opportunity to look at the market and show off and negotiate at a great price that they want,” she told Now Toronto on Thursday.
Although most inexperienced buyers tend to give more importance to factors like the value price or lower down payments, King explains that the interest rate is one of the most important things to consider when entering the market, since they can have a significant impact on monthly mortgage payments.
“A slight difference in interest rate percentage could mean a significant reduction in a monthly payment, hundreds of dollars. So, this first reduction is a very positive note in the real estate industry, and hopefully it will be the first of many more to come.”
On the other hand, Royal LePage broker Shawn Zigelstein says that the 25-point drop might not have that much impact in buyer’s pockets. According to him, this percentage could instead mean minimum savings per month, but could be an incentive for those looking for a push to jump into the market.
“Hopefully it will help those people that were waiting for interest rates to come back down again, [because] either they were priced out of the market previously and every little bit helps, or their qualification can go up a little bit more because of their lending ability at that point, with the costs coming down as well,” he told Now Toronto.
In addition, especially in Toronto, with supply going up and buyers finding a favourable market, he says many would also have the chance to negotiate prices or even upgrade to larger homes.
“If a first-time homebuyer is looking to get into a small one-bedroom condominium within the city, they’ve got the ability with a ton of inventory out there in order to find the right place for them,” he said.
“I am finding that the larger units which typically are not going to your first-time homebuyers, those ones are actually selling and are staying pretty stable at this point, just because you’ve got larger properties that people can get into.”
Nevertheless, Victor Tran, mortgage and real estate expert at Rates.ca, says the lower rates are unlikely to change the market much.
According to him, economic uncertainty and affordability issues, especially in expensive markets such as Toronto and Vancouver, are likely to keep most people away from buying.
“This overnight rate cut is unlikely to lead to substantial activity in the housing market, and the down market is likely to continue for the foreseeable future. Given the broader economic uncertainty, it’s not surprising that many would-be homeowners are putting purchase plans on hold,” he said in a statement.
However, he adds that increased inventory and softening prices may make purchasing an attractive option for some buyers.
IS NOW A GOOD TIME TO BUY?
Both King and Zigelstein say now could be a great time for first-time homebuyers to jump in.
Although prices are expected to decrease further, the current high levels of supply allows buyers to negotiate more.
“I think now is a great time to get into the housing market, as we anticipate to see further rate reductions going into 2026, and once our rates start to reduce more significantly, then we will see an increase in competition and buyer activity. So, right now is a great time because the buyer pool is small, but we are already starting to see that relief in those interest rates,” King explained.
“I think there’s great opportunities now. I think buyers have the ability now of choice. They’ve got the ability to go out. There’s a lot of listings that are sitting on the market. If a buyer is serious, and we find a serious seller, of course there’s going to be that opportunity,” Zigelstein said.
Meanwhile, Tran advises buyers to wait a bit longer. According to him, the Bank of Canada’s next interest rate announcement on Oct. 29 could bring another cut. The realtor advises potential buyers to keep a close eye on the bank’s decisions and to stay informed about the housing market.
“While lower rates aren’t guaranteed, it’s possible we may see more overnight rate cuts before the end of the year, and closing later in the year will allow a homeowner to take advantage of any downward movement in rates in the coming months.”