The 2025 mortgage rates will have a big impact on home prices, borrowing costs, and real estate trends in the GTA and Oak Ridges. Whether you’re downsizing, refinancing, or investing, shifting interest rates can impact home values and borrowing power. This guide explains how these changes could affect your financial decisions and home equity.
Key topics covered:
✔ How 2025 mortgage rates affect home prices
✔ Refinancing in 2025: Is now the right time?
✔ Why mortgage-free homeowners should still pay attention
✔ The impact of real estate trends on downsizing decisions
The 2025 mortgage renewals in Canada are shaping up to be one of the most challenging financial shifts in recent years. Many homeowners who locked in historically low rates in 2020 and 2021 will face significantly higher payments when their terms expire. With nearly 60% of mortgages up for renewal in 2025-2026, affordability concerns are rising.
Mortgage rates surged in 2022-2023, making refinancing and renewal more expensive.
Some homeowners may see payment increases of 30-40% due to higher interest rates.
Household debt levels remain high, creating financial strain for many families.
The Bank of Canada has cut rates by 2% since June, aiming to stimulate the economy and help ease affordability issues.
As mortgage payments rise, some homeowners are struggling to keep up, leading to more power of sale listings. This presents investment opportunities for buyers looking to enter the market. Buyers looking for discounted properties should monitor distressed sales, be prepared to act quickly, and consider working with an experienced real estate agent to navigate these opportunities effectively.
Mortgage rates have a big effect on home prices in the GTA and Oak Ridges.. Here’s why:
Even mortgage-free homeowners are affected. Higher borrowing costs reduce the number of buyers, which influences overall home values.
Your home equity shifts with the market. When rates rise, borrowing against your home gets tougher. When rates drop, refinancing becomes more attractive.
Bank of Canada rate cuts may bring back buyers who have been waiting on the sidelines for better affordability.
Listings have been low for two years as sellers waited for better conditions. However, many homeowners will need to sell due to life changes like divorce, job relocation, or estate sales.
Mortgage renewals tend to increase listings. This happens for two key reasons:
Higher mortgage payments force some homeowners to sell or downsize.
Sellers delay listing until their mortgage term ends to avoid costly penalties.
With these factors combined, 2025 may see more homes hitting the market and more buyers re-entering, creating shifts in home values.
According to CMHC, over the past 25 years, variable mortgage rates were cheaper almost every year—except in 2023 & 2024.. If you prefer predictable payments, a fixed mortgage is the safer option. If you can handle short-term fluctuations, a variable mortgage may save you money over time.
Fixed rates: Higher initial costs but consistent payments.
Variable rates: Potential for savings but more uncertainty.
Hybrid options: A mix of fixed and variable for flexibility.
❓ What if I can’t afford my new mortgage payment?
💡 If your payments are increasing significantly, you can speak with your lender about options such as amortization extensions, adjusting payment frequency, or accessing home equity for financial stability. Additionally, shopping around and negotiating for better rates can help secure more favorable terms and reduce your financial burden.
Many homeowners are downsizing to cut costs and access home equity. With rising mortgage costs, some are opting to cash in on their property value and move to a lower-maintenance home. Here’s what to consider:
Higher interest rates mean buyers need more income to afford large homes, which can influence the pool of potential buyers for downsizers. With decreasing interest rates, buyers are beginning to enter the market.
Those with lower-rate mortgages may hesitate to move, reducing supply in some market segments.
Some downsizers use home equity to purchase a new property outright, avoiding high borrowing costs.
Alternatives to downsizing: Homeowners who prefer to stay put can explore renting out part of their home or using a reverse mortgage to access home equity without moving.
The 2025 mortgage rates will affect home prices, refinancing choices, and downsizing decisions. Whether you’re renewing or selling, understanding market trends helps you make informed choices.
📌 Thinking about selling, refinancing, or investing? Let’s chat!
