The Bank of Canada just delivered another jolt to the economy, trimming its key interest rate by 25 basis points to 2.25%. It’s the second-last announcement of the year—and a big one for homeowners, buyers, and investors watching the market like hawks.
Governor Tiff Macklem acknowledged that inflation is running a touch hotter than expected, but the central bank still believes pricing pressures will ease heading into 2026. For now, policymakers say they're comfortable with where rates sit—and aren’t planning additional cuts unless the outlook changes.
Why the Cut Happened
The backdrop isn’t pretty. U.S. protectionism, ongoing tariffs, and trade uncertainty have been pushing hard on the Canadian economy:
- GDP shrank 1.6% in Q2
- Hiring is slowing as businesses freeze staffing
- Unemployment is sitting at 7.1%, the highest since 2016 outside pandemic years
Macklem said plainly: Canadian households and businesses are feeling the squeeze. With tariffs pushing up costs, the Bank sees this rate level as the “right spot” to support the economy while trying to keep inflation close to the 2% target.
No More Cuts… For Now
The Bank has already shaved off a full percentage point this year. Macklem signaled that unless something major shifts, the next meeting on December 10th is likely a “hold.”
Some economists, though, think policymakers will eventually need to cut again—possibly another 50 basis points in 2026—as growth remains sluggish.
Are We Headed Into a Recession?
Maybe technically, but not dramatically.
The Bank says there could be two quarters of mild negative growth, but isn’t expecting a deep downturn or a spike in unemployment. Still, with GDP projected to grow just 1.2% this year and 1.1% in 2026, the economy is clearly cooling.
Next week’s federal budget is expected to dump a fresh dose of fiscal stimulus into the system—something that could support growth, but also could heat inflation back up.
What This Means for You — The Lendworth Lens
Here’s where it gets real for borrowers and investors:
✅ Private mortgage demand is about to rise
Lower rates from the Bank of Canada don’t automatically translate into easier bank approvals. In fact, as unemployment rises and GDP softens, traditional lenders often get more conservative. That’s when equity-based lenders like Lendworth step in.
✅ Refinance & HELOC activity picks up
When rates fall, homeowners want to reset high-cost debt. Same-day approvals and fast private closings become especially attractive.
✅ Investors benefit from stability
With inflation expected to cool and further rate cuts unlikely in the short term, stable yield-producing investments—like mortgage funds—become a safe haven.
✅ Real estate buyers gain negotiating power
Slower growth + softer demand = better opportunities for those ready to act.
Final Word
The Bank of Canada may be tapping the brakes on further cuts, but the shift to 2.25% signals a new phase for the market—one where flexibility, equity, and speed matter more than ever.
Whether you’re refinancing, purchasing, or investing, Lendworth is here to help Ontarians move quickly and confidently in a changing economy.
Smarter lending starts here.
Visit www.lendworth.ca or call 905-597-1225 for same-day approvals across Ontario.