Rates Are Falling!
Mortgage Market Update 2025 — What’s Driving the Rate Drop?
Here’s your mortgage market update for 2025 — and the good news is rates across Canada are finally moving in the right direction.
Interest rates are trending down, but what does that really mean for today’s homebuyers and homeowners across Vaughan and the GTA? 🏡
In this quick Q&A with mortgage broker Jayant Bahel, we unpack the most common mortgage questions — from affordability and fixed-vs-variable decisions to refinance strategies and the impact of new 2025 rules.
BoC Policy Rate 2.25%
Prime Rate
4.45%
Next BoC Meet
Dec 10, 2025
💡 Key Takeaways
✅ Know your numbers: Affordability matters more than eligibility
🏡 New rules help: Many first-time buyers now choose 30-year amortizations
📉 Variable is back: About 70% of buyers are choosing variable rates
💰 Big savings: Payments will be much lower last year.
🔄 Refinance smart: Lower rates don’t always save money after penalties.
🕒 No perfect time: Buy when you’re financially ready.
In this mortgage market update for 2025, we’re seeing borrowers gain more flexibility as lenders adjust to the new rate environment.
Now Let’s Jump Into the Full Mortgage Q&A
Q. Interest rates are trending down — what’s the smartest move buyers can make right now?
A. Do an affordability assessment. The interest rates can come down all the way, but if you end up buying something that you can’t afford, you’re going to regret it later.
So do your assessment first. Your eligibility is different from your affordability, so it’s more of a personal thing than looking outside in the market at what’s happening.
Q. How have the 2025 mortgage rule changes impacted first-time buyers?
A. I think the biggest change that has impacted the first time home buyers is the extended amortization on insured mortgages.
This rule came into effect from December 15th of last year, 2024 and as a result, I see most of my first time home buyers clients opting for a 30 year amortization mortgage now when they’re doing less than 20% now.
Q. Fixed or variable — what are most buyers choosing this fall, and why?
A. I feel you should look inside than more than outside before making a decision variable is trending down. There is a possibility of you saving in when you lock in a variable rate, but at the same time you get a mortgage for five years. So if it is expected to come down for the next one year or so, there’s a possibility that it may start going up after one year. No one knows.
We expect the rates to come down, but then again, it’s a rollercoaster ride. They can go up back again as everyone found out in 2022. Of course, anytime that could happen.
But to answer your question, I would say until about two months back, 50% of my clients were opting for variable and 50 for fixed people have made the move from fixed to variable. Now almost 70% of my clients are opting for variable.
Q. How much do today’s rates really change monthly payments compared to last year?
A. Oh yeah. Another great question. Interest rates have come down both for fixed and variable by over a percentage point since last year,
Which means for a house, for this particular house (listed at $1,225,000), your mortgage payment could be almost $750 lower than what would’ve been last year. That’s a big savings.
At the same time, if you were able to afford it last year, you would feel a little ease. Your monthly budget’s easing up a bit. That said, you should never go over your budget.
Q. We’re here in Mt Albert (East Gwillimbury, ON) — are lenders treating suburban or GTA North areas any different right now?
A. Not really. This is not too far from the core GTA, but if you were further up, let’s say in Sudbury, some lenders may look at it differently.
Q. For families moving up to a larger home, what’s the best way to handle bridge financing?
A. Bridge financing is fairly common actually. Most lenders have the option to offer bridge financing and it totally depends on what’s the timeframe between you selling the house, closing that one, and moving into the new house.
The bridge financing is fairly open. If we go to the same lender for both homes, it’s easily handled.
It’s very, very common for people to opt for bridge financing when they’re selling, before closing on their new home.
Q. We keep hearing about the mortgage stress test — what does that actually mean for real buyers today?
A. Well, stress test is just to make sure that you don’t over borrow. Don’t push your affordability limits. That’s what the banks want to understand, that if they’re lending you, let’s say a million dollars, would you be in a good shape to return it back over the next 25, 30 years?
As per the mortgage eligibility rules, you are qualified at plus 2%.
For example, if your variable rate today is say 3.75%, you are qualified at that rate plus 2%, which is 5.75%. Your mortgage qualification amount is calculated at 5.75%. Just to make sure if the rates move up by let’s say 2%, you are still able to afford that property and make the payments.
Q. What can current homeowners do to take advantage of lower rates or upcoming renewals?
A. You need to do the cost benefit analysis.
If you’re on fixed rates, you might have to refinance your current mortgage, which means you break your existing mortgage and move to a lower rate. However, this can also mean penalties for you of course. So reach out to a mortgage agent who can do the math for you.
Make sure you understand what your penalties are going to be because a lower rate doesn’t always mean savings for you because you have to break your current mortgage and if you are with a big bank, their penalties could be pretty high.
Q. If someone’s waiting for ‘the perfect rate,’ what do you say to them?
A. There’s no perfect time, there’s no such thing. It brings me back to my first point. You have to do your own assessment.
You are buying a home for 30 years or 25 years, the interest rates are going to go up, the interest rates are going to go down. It’s a long journey. You need to be prepared to handle it throughout these 25-30 years
The only perfect time is when you are ready, when you feel you can afford a mortgage payment and you feel you are ready for home ownership and you can pass the stress test.
Q. How can buyers lock in a rate before they even start shopping?
A. Reach out to a mortgage agent, get pre-approved, and get a better understanding of what you are in for.
Q. For anyone watching who wants personalized advice — how can they contact you for a quick mortgage checkup or assessment?”
A. Reach out to me on Instagram, reach out to me on my phone. My number is 647-675-3220
What This Means for Buyers and Homeowners in 2025
– Final Thoughts & Expert Guidance
As we look at the mortgage market update for 2025, it’s clear that borrowers now have more flexibility than they did in 2023–2024.
Today’s mortgage market is changing fast, and trusted advice matters more than ever.
As a Vaughan-based Realtor focused on helping families buy and sell with confidence, my goal is to be your top resource for real-estate guidance across the GTA.
For mortgage strategy, Jayant Bahel continues to be my go-to expert—an outstanding broker who brings clarity to every client he works with. Together, we’re here to help you make the smartest move possible.
Next Steps & Helpful Resources
- 💰 What is your home worth now? → FND MY HOME VALUE
- ⏰ Book a 1:1 consultation with Raj → BOOK CONFIDENTIAL MEETING
- 🧮 Need personalized mortgage advice? → CONTACT Jayant Bahel