Bank of Canada Cuts Rates to 2.25% – What it Means for Renters & Landlords (October 2025)  

The Bank of Canada’s latest rate cut to 2.25% has major implications for renters, landlords, and anyone watching Canada’s housing market. With borrowing costs easing but rental demand still high, understanding what this decision means is more important than ever. At liv.rent, we break down the Bank’s October 2025 announcement in simple terms—so you can stay informed, plan ahead, and track how interest rate changes shape rent prices in your city.

Key Highlights

• On October 29, 2025, the Bank of Canada introduced Overnight rate reduced to 2.25%, Bank Rate at 2.5%, deposit rate at 2.2%. 

• Canada’s GDP contracted 1.6% in Q2 2025, impacted by falling exports and weak business investment. 

• Household spending and residential investment rise, but affordability and labor shortages constrain growth. 

• Unemployment remains elevated at 7.1% in September, with slower wage growth. 

• Inflation remains near 2%, within the Bank’s target range. 

• Bank signals that the current rate is appropriate, with further changes dependent on economic conditions. 

What Changed in Today’s Announcement?

• Rate cut by 25 basis points to 2.25% 

• Bank Rate at 2.5%, Deposit Rate at 2.2% 

• Decision aims to support economic activity amid structural trade impacts 

• Emphasis that the current rate is suitable for maintaining inflation near 2% 

How This Affects Renters & Landlords: Impact on Rent Prices

Renters:

• High borrowing costs mean fewer people can buy homes, keeping rental demand high. 

• Expect competition for rental units in major cities, keeping prices elevated. 

• Renting may remain the more affordable or flexible option for many Canadians. 

Landlords / Investors:

• Elevated investment costs may slow new construction, limiting supply growth. 

• Tenant demand remains strong, offering stable rental income opportunities. 

• Residential investment is increasing, but structural economic challenges remain. 

Global and Domestic Economic Context

Global Economy:

• Global growth is expected to slow from 3.25% in 2025 to 3% in 2026–2027. 

• U.S. economy remains strong, supported by AI investment, but tariffs are raising prices. 

• Eurozone growth is slowing; China sees weaker business investment but exports to other countries are helping offset losses. 

• Global financial conditions easing; oil prices relatively stable; Canadian dollar slightly weaker. 

Canada’s Economy:

• GDP contracted 1.6% in Q2 2025, mostly due to weak exports and investment.  
• Household and government spending rising, residential investment improving. 
• GDP projections: 2025 – 1.2%, 2026 – 1.1%, 2027 – 1.6%. 
• Excess capacity in the economy expected to persist but gradually be absorbed.

Why the Bank of Canada Interest Rate Cut Matters

• Structural trade damage limits monetary policy effectiveness 

• Cut intended to support economic activity while keeping inflation low 

• Bank signals current rate level appropriate, future adjustments depend on incoming data 

Mortgage & Lending Highlights (October 2025)

• Prime rate at major banks remains 6.45%. 

• Fixed and variable mortgage rates remain high, reflecting ongoing borrowing costs. 

• Borrowers may see slightly lower rates on new mortgages, but overall costs remain significant. 

Market Reactions & Expert Commentary

• BC Royal Bank is decreasing its prime rate by 25 basis points from 4.70% to 4.45%, effective October 30, 2025. 

• Analysts note that the rate cut supports household and residential investment, but structural trade issues limit broader economic gains. 

What Happens Next?

• Next Rate Announcement: December 10, 2025 

• Next Monetary Policy Report: January 28, 2026 

• Analysts expect no further cuts in 2025; Q4 economic data will guide future policy 

Data table of the important rates

Rate Type	October 2025
Overnight Policy Rate	2.25%
Bank Rate	2.50%
Deposit Rate	2.20%
Prime Rate (Major Banks)	6.45%
CPI Inflation (Sep)	2.4%

Track monthly rent trends for your city here.

Related Rental & Housing Resources

Rent Reports Canada – https://liv.rent/blog/rent-reports/ 
Bank of Canada  (BoC) – https://www.bankofcanada.ca/2025/10/fad-press-release-2025-10-29/ 

Stay updated on how Bank of Canada decisions affect Canadian renters and landlords. Track monthly rent trends, mortgage rates, and housing data with liv.rent monthly reports.

FAQs

What is the interest rate for the Bank of Canada in October 2025?

On October 29, 2025, the Bank of Canada announced that it is cutting its policy rate to 2.25% 

What's happening with interest rates in 2025?

In 2025, Canada’s interest rates are lower, with the Bank of Canada cutting the overnight rate to 2.25%, supporting the economy while keeping rental demand strong.

What will be the next interest rate announcement?

The next Bank of Canada interest rate announcement is scheduled for December 10, 2025. 

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