It’s a new year, and you are finally ready to take that step toward your dream home or secure a second mortgage. While this is an exciting goal, it’s not without its challenges.

Fluctuating interest rates, rising home prices, and shifting projections for Canada’s real estate market could impact your plans more than you think. Therefore, it’s essential to understand these trends and work with an experienced mortgage broker.

In this blog, we will clarify important mortgage rate forecasts for 2025, key market changes, and what they mean for Ontarians who are ready to turn their homeownership dreams into reality.

Why Mortgage Rates Matters for Homebuyers and Homeowners

Mortgage rates are more than just numbers; they directly influence affordability, monthly payments, and long-term financial goals.

For prospective homebuyers, a lower rate can mean the difference between buying their dream home or settling for less. Meanwhile, for homeowners considering refinancing or accessing equity, even a small rate change has major financial impacts.

Whether you are purchasing your first home or planning to switch mortgage lenders, staying informed about rate trends and consulting with a trusted mortgage broker is key to making smart, strategic decisions.

Mortgage Rate Forecasts and Trends in 2025

Several key factors are shaping mortgage rates and the real estate sector in 2025, including the following:

  • Bank of Canada Policy Rate: In December 2024, the Bank of Canada reduced its policy rate by 50 basis points to 3.25%. While this may be encouraging, the effects of such rate changes typically take 12 or 18 months to affect the economy. This lag means its full impact may not be felt until 2025, thus affecting borrowing costs and mortgage rates.
  • Mortgage Renewals: Over the next two years, around 60% of existing mortgages will renew. Many of these borrowers, renewing for the first time since the 2022 rate hikes, will face significantly higher payments, which will tighten household budgets.
  • Housing Prices: The Canadian housing market is projected to see a 6% year-over-year increase in prices, bringing the average home cost to $856,692 by the end of 2025. Rising prices could put additional pressure on buyers already contending with higher rates.
  • New Mortgage Rules: First-time buyers and new-build purchasers can now access 30-year amortizations, thus reducing monthly payments. Additionally, the insured mortgage price cap has increased from $1 million to $1.5 million, making homeownership more accessible for higher-priced properties.
  • Seasonal Trends: Q1 2025 (January to March) is expected to see the strongest price growth, with a 2% increase from Q4 2024 (October to December). However, price gains will moderate to 1.5% in mid-year and taper to 1% by year-end.

These factors create opportunities and challenges for homebuyers and those looking to switch mortgage lenders.

How Northwood Mortgage Brokers Can Simplify Your Mortgage Journey in 2025

Northwood Mortgage is a leading mortgage broker in Ontario with decades of experience and a deep understanding of Canada’s real estate market. We know how confusing the mortgage world can feel, especially with all the trends and projections in the new year; this is why we are here to make things simple for you.

If you are buying your first home, refinancing, consolidating debt, or planning to switch mortgage lenders, we offer personalized mortgage planning sessions to fully understand your situation, explain potential impacts of the latest real estate trends and projections, and guide you through every step of the process.

Our team of mortgage brokers works closely with all types of reliable lenders, including banks, unions, and private lenders. This allows us to secure competitive rates and negotiate terms that match your financial goals.

From lowering interest rates to providing strategic options like debt consolidation or mortgage transfers, we take the stress out of the mortgage process, so you can focus on your future.

For more information, call Northwood Mortgage at 888-495-4825 or contact us online to leverage your real estate opportunities in 2025!