FOR IMMEDIATE RELEASE

Media Relations

Ottawa, Ontario

January 29, 2025

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The Bank of Canada today reduced its target for the overnight rate to 3%, with the Bank Rate at 3.25% and the deposit rate at 2.95%.The Bank is also announcing its plan to complete the normalization of its balance sheet, ending quantitative tightening. The Bank will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.

Projections in the January Monetary Policy Report (MPR) published today are subject to more-than-usual uncertainty because of the rapidly evolving policy landscape, particularly the threat of trade tariffs by the new administration in the United States. Since the scope and duration of a possible trade conflict are impossible to predict, this MPR provides a baseline forecast in the absence of new tariffs.

In the MPR projection, the global economy is expected to continue growing by about 3% over the next two years. Growth in the United States has been revised up, mainly due to stronger consumption. Growth in the euro area is likely to be subdued as the region copes with competitiveness pressures. In China, recent policy actions are boosting demand and supporting near-term growth, although structural challenges remain. Since October, financial conditions have diverged across countries. US bond yields have risen, supported by strong growth and more persistent inflation. In contrast, yields in Canada are down slightly. The Canadian dollar has depreciated materially against the US dollar, largely reflecting trade uncertainty and broader strength in the US currency. Oil prices have been volatile and in recent weeks have been about $5 higher than was assumed in the October MPR.

In Canada, past cuts to interest rates have started to boost the economy. The recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak. The outlook for exports is being supported by new export capacity for oil and gas.

Canada’s labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.

The Bank forecasts GDP growth will strengthen in 2025. However, with slower population growth because of reduced immigration targets, both GDP and potential growth will be more moderate than was expected in October. Following growth of 1.3% in 2024, the Bank now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth. As a result, excess supply in the economy is gradually absorbed over the projection horizon.

CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected. A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2%. The Bank forecasts CPI inflation will be around the 2% target over the next two years.

Setting aside threatened US tariffs, the upside and downside risks around the outlook are reasonably balanced. However, as discussed in the MPR, a protracted trade conflict would most likely lead to weaker GDP and higher prices in Canada.

With inflation around 2% and the economy in excess supply, Governing Council decided to reduce the policy rate a further 25 basis points to 3%. The cumulative reduction in the policy rate since last June is substantial. Lower interest rates are boosting household spending and, in the outlook published today, the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested. We will be following developments closely and assessing the implications for economic activity, inflation and monetary policy in Canada. The Bank is committed to maintaining price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is March 12, 2025. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on April 16, 2025.

As of January 27, 2025, Canadian mortgage rates vary by term and lender. 

• 2-year fixed: The average rate is 6.53%, but rates can be as low as 4.59%

• 3-year fixed: The average rate is 5.47%, but rates can be as low as 4.34%

• 4-year fixed: The average rate is 5.65%, but rates can be as low as 4.54%

• 5-year fixed: The average rate is 5.02%, but rates can be as low as 4.14%

• 7-year fixed: The average rate is 6.37%, but rates can be as low as 5.94%

• 10-year fixed: The average rate is 7.14%, but rates can be as low as 6.14%

Lenders

• Desjardins: Offers a 4-year fixed rate of 4.24% 

• Radius Financial: Offers a 3-year variable rate of 4.55% and a 5-year variable rate of 4.60% 

• RFA: Offers a 2-year fixed rate of 4.64% 

• Royal Bank of Canada: Offers a 5-year closed rate of 6.390% 

• TD Bank: Offers a 3-year fixed closed special rate of 5.09% 

• True North Mortgage: Offers a 6-month fixed rate of 2.99% 

You can check out these websites for more information on Canadian mortgage rates: nesto.ca, NerdWallet, and RBC Royal Bank. 

Zoning refers to the local government's regulation of land use within a specific area. It involves dividing a municipality or jurisdiction into different zones or districts, each with specific rules and regulations regarding how the land can be utilized. Zoning laws typically dictate the type of activities or developments allowed in a particular zone, such as residential, commercial, industrial, or mixed-use.

The primary purposes of zoning are:

1. Land Use Planning: Zoning helps communities plan and organize their development in a way that promotes orderly growth and protects the overall well-being of the community. It prevents incompatible land uses from being located too close to each other.

2. Property Values: Zoning can impact property values by influencing the character of a neighborhood. Residential areas, for example, are often zoned to preserve a certain quality of life, while commercial areas are designated for business activities.

3. Public Health and Safety: Zoning regulations can address concerns related to public health and safety by setting standards for things like building setbacks, fire codes, and environmental protection.

4. Aesthetic Considerations: Zoning may include regulations on the appearance and design of buildings, ensuring that developments contribute to the overall aesthetic of an area.

5. Infrastructure Planning: Zoning can help in planning for necessary infrastructure such as roads, utilities, and public services by aligning them with the expected development in specific zones.

When purchasing real estate, understanding zoning regulations is crucial for several reasons:

1. Intended Use: Zoning determines what you can and cannot do with a property. Before purchasing, it's essential to know if the property is zoned for your intended use, whether it's residential, commercial, industrial, or mixed-use.

2. Future Development: Zoning regulations provide insights into potential future developments in the area. This information can affect property values and the overall desirability of the location.

3. Compliance and Restrictions: Zoning ordinances come with specific regulations and restrictions. Buyers need to be aware of these rules to ensure compliance with local laws and to avoid legal issues in the future.

4. Property Value Impact: Zoning can influence property values directly and indirectly. Understanding the zoning regulations in an area can help buyers make informed decisions about the long-term value and potential resale value of the property.

In summary, zoning is a critical aspect of real estate that influences the use, development, and value of properties. Prospective buyers should thoroughly research and understand zoning regulations before making a real estate purchase to ensure their plans align with local zoning laws and to make informed investment decisions.

Home trends coming your way this 2025

The past five years have been of immense change. As we adapted to the realities of COVID, and then moved away from them, our homes adapted to our lifestyles. 

Many people now spend more time at home working, studying and exercising.  For this reason, it’s no surprise that the trends for 2025 focus on comfort, ease, and making our spaces truly ours. 

Check what design experts in North America have predicted for home trends in 2025:

1. Sustainability

The rise of climate change concerns has made people reconsider the ways they relate to their environment. 

According to The Home Network, in 2025, there will be a bigger focus on making homes more energy-efficient to not only be kind to the environment, but also save money on utilities, increase home value, and benefit from tax incentives. 

Check out these tips from CREB® on how you can make your home greener. 

Aside from making homes energy-efficient, according to HomeNetwork people are also choosing natural (and even homemade) cleaning products instead of ones with high amounts of chemicals, and are opting to buy furniture made out of sustainable materials such as cork.  

Experts also predict an increase of natural plants in homes – not just for decoration but to truly bring nature into the spaces to help improve air quality and reduce stress.

2. Coziness and Comfort

Comfy and inviting furniture became popular last year, but in 2025, design experts predict it will take the lead through the use of curves: Rounded sofas like the famous “Blob” sofa, chairs and circular coffee and dining tables, as well as accent chairs and oblong mirrors that help create a sense of fluidity and comfort. 

Warm neutral palettes, earthy tones, and organic colours, along with wood elements such as ceiling beams, trim, millwork, wall paneling, and cabinetry are expected to be seen more this year to add warmth.

3. Self-care in Style

COVID made us realize the importance of mental health, self-care and rest. As we move forward, people have prioritized these aspects of health. This includes bathing, which has become more than a duty. It’s now an immersive experience to relax and rejuvenate. 

For this reason, experts predict that people will move towards bathrooms that can be turned into micro-spas with mesmerizing bathtubs, spacious showers, underwater speakers and luxurious bath products. 

Originally designed for large spaces, wet rooms are also expected to be popular as homeowners include separate showers and tubs in them for more comfort.

4. Boldness and Vibrancy

This year, maximalism is coming back. Houzz senior editor Michelle Parker told Forbes Magazine that designers are getting more and more requests to include layers of bold colours, patterns and textures. Examples are grooved walls and ceiling panelling in bold colours, as well as patterned furniture, rugs and pillows. 

Lively colours like magenta and tangerine carefully mixed and matched with contrasting textures (rough, smooth, soft, hard) seek to add vibrancy and energy to spaces in 2025. 

5. Embracing Outdoor Spaces

Owners of single-family homes with backyards and front porches found solace in these spaces during the pandemic to escape cabin fever.

While we live in a post-COVID era, the love of homeowners for their outdoor havens has stayed. So much so that Forbes Magazine reported that going into 2025, homeowners with backyards will focus on creating memorable outdoor entertaining spaces to welcome guests. 

According to Michelle Parker, homeowners are embracing outdoor cooking methods that go beyond the classic BBQ and are choosing to install pizza ovens, smokers, ceramic kamado-style barbecues and Argentinian-style gaucho grills that use wood or charcoal. 

In addition to the culinary aspect, more people are also focused on adding more features to their space, such as outdoor showers, waterproof sound systems and freestanding home offices.

Sources:

• Home Network 

• Martha Stewart

• Forbes

Key Points:

• Purpose: Used when buying a new home before selling the current one.

• How It Helps: Bridges the gap in down payments until the sale closes.
  Firm Sale Required: Most lenders require a firm sale on the current property to consider bridge financing.

• Expert Guidance: Different lenders offer varying rates and terms. Expert advice can save or cost clients significantly.

Bridge financing, also known as an interim mortgage, is a short-term loan that helps buyers bridge the gap between selling their current home and purchasing a new one. It allows the buyer to use the equity in their current home as a down payment on their new home. 

Bridge financing is most common in competitive real estate markets, and is often used when the buyer needs to make a quick decision on a new home. The loan is typically paid off when the buyer sells their current home. 

• Loan term

  Bridge loans are usually for a maximum of 90 days, but can range up to 12 months or longer. 

• Interest rates

  Bridge loans usually have higher interest rates than mortgages because they are short-term. The rate is often between the prime rate + 2% and the prime rate + 3%. 

• Collateral

  Bridge loans are secured against the current property. 

• Lenders

  The lender that provides the new mortgage typically also provides the bridge loan, but a second lender may be used if the primary lender doesn't offer bridge financing. 

• Documents

  To qualify for bridge financing, you'll usually need a copy of the sale agreement for your current home and the purchase agreement for your new home.

If you have questions please reach out to your mortgage broker.