February 11, 2025:

What’s Driving Mortgage Rates Down?

Recent trends indicate that fixed mortgage rates are on the decline, offering a much-needed boost for Canadian homebuyers. With affordability being a major challenge in Ontario, lower mortgage rates could mean more purchasing power, lower monthly payments, and renewed confidence in the housing market.

But what’s behind this drop in rates, and what does it mean for buyers in Simcoe County and York Region? Let’s break it down.

What’s Driving Mortgage Rates Down?

1. Economic Uncertainty & Global Trade Policies

The recent decline in fixed mortgage rates is partially driven by economic uncertainty related to global trade policies, particularly in the U.S.

  • Recent trade tensions and tariff threats from the U.S. have created uncertainty in financial markets, causing investors to shift their money into safer assets like government bonds.

  • Fixed mortgage rates are heavily influenced by bond yields, which have been declining as a result. When bond yields fall, mortgage rates follow.

This global uncertainty is indirectly benefiting Canadian homebuyers, making borrowing more affordable.

2. Bank of Canada’s Interest Rate Strategy

Canada's central bank has paused rate hikes and has hinted that rate cuts could be on the horizon. As a result:

  • Major lenders have already started lowering their fixed mortgage rates in response to lower bond yields and shifting market expectations.

  • The mortgage rate drop is expected to continue, as lenders adjust to potential Bank of Canada rate cuts in 2025.

Lower rates mean more Canadians can qualify for mortgages, and existing homeowners may have the opportunity to refinance at better rates.

3. Housing Market Dynamics

Recent data indicates a rebound in home sales in the Greater Toronto Area, which includes York Region.

  • In January 2025, home sales increased by 10% from December, reaching 5,971 units.

  • This uptick suggests renewed buyer confidence, potentially spurred by the decline in mortgage rates.

However, it's important to note that while sales have rebounded, the average home price has remained relatively stable, indicating that affordability challenges persist.

What This Means for Homebuyers in Simcoe County & York Region

Lower mortgage rates present a unique opportunity for buyers in Simcoe County and York Region, two areas that continue to attract:

  • Families looking for more space

  • Investors seeking growth potential

  • Move-up buyers upgrading to larger homes

Sample Mortgage Scenarios

Let’s compare how a 1% drop in mortgage rates can impact affordability:

Key takeaway: Even a 1% decrease in fixed mortgage rates results in hundreds of dollars in savings per month, making homeownership significantly more affordable.

When is the Right Time to Buy?

Key Takeaways for Buyers

  • If You’re on the Fence: The downward trend in fixed rates suggests that now is the right time to start preparing. Rates could drop further, but waiting too long might mean missing out on available inventory.

  • If You’re Actively Searching: Locking in a lower mortgage rate now can increase your affordability and secure a better deal before competition heats up.

  • If You’re Selling & Buying: A market shift could bring more buyers back in, improving your chances of selling at a stronger price while still benefiting from lower borrowing costs.

Next Steps: How to Take Advantage of Lower Mortgage Rates

  1. Get Pre-Approved ASAP: Even with lower rates, mortgage approvals remain strict. Speak to a mortgage broker to secure the best rate available. If you require recommendations for trusted mortgage brokers, please contact us today.

  2. Monitor Rate Trends: While rates are easing, staying informed on Bank of Canada updates will help you time your move strategically.

  3. Consider a 5-Year Fixed Rate: With rates declining, a 5-year fixed mortgage can lock in affordability for years, avoiding future market volatility.

  4. Explore Off-Market & Pre-Construction Deals: In Simcoe County & York Region, VIP & assignment sales offer additional opportunities at below-market pricing before demand picks up.

  5. Don’t Wait Too Long: If you’re financially ready, acting sooner rather than later could help you secure a better home while rates are still low.

Final Thoughts

Falling fixed mortgage rates present a golden opportunity for buyers in Simcoe County and York Region to move ahead with confidence. Lower borrowing costs make homeownership more affordable, but waiting too long could mean dealing with rising demand and increased competition.

Ready to take the next step? Discover how much your current home is worth with our instant, free home value estimator. Knowing your home's value can help you make informed decisions in this dynamic market. If you would prefer to chat with a realtor directly, please book and appointment below.

Sources: Financial Post: Falling Fixed Mortgage Rates Could Be Booster Juice for Buyers https://financialpost.com/real-estate