Bank of Canada Interest Rate Decision — September 2025: What It Means for Calgary Homeowners & Buyers

The Bank of Canada has just made its first interest rate cut since March. On September 17, 2025, the overnight benchmark rate was lowered by 25 basis points from 2.75% to 2.50%. This decision marks a shift from recent months of holding steady. In this post, we’ll break down what the change means, how it affects mortgage costs in Calgary, and what homeowners, buyers, and sellers should be considering now.

What the Announcement Was

The Bank cut its key policy rate by 0.25%, bringing it to 2.50%, citing a “weaker economy,” rising unemployment (above 7%), and fewer inflation risks.
This is the first rate cut since March 2025.
The BoC noted that while inflation remains relatively stable and within target, economic pressures — such as trade disruptions — and soft employment data justified easing policy.

How This Impacts Mortgage & Borrowing Costs in Calgary

Variable-rate mortgages are likely to respond more quickly to this cut. Those who have variable or adjustable rates may see lower monthly payments.
Fixed-rate mortgages might adjust more slowly depending on lenders, but this decision tends to create downward pressure over time.
Borrowing power improves slightly — with interest cost decreasing, potential buyers might qualify for more mortgage capacity or find payments more manageable.
Refinancing becomes a more appealing option for some homeowners with (almost) expiring fixed rate terms or for those considering switching from variable to fixed as the landscape shifts.

What Buyers & Sellers in Calgary Should Know

For Buyers:
This rate cut improves affordability somewhat, but don’t assume significant decreases in all monthly payments. Shop around, check both fixed and variable offerings, and get pre-approval if possible.
For Sellers:
Lower rates can stimulate buyer activity, especially for those who were sitting on the fence. However, expect that the market may not see an immediate surge. Buyers may still be cautious because of economic uncertainty.

Comparing to the March 2025 Decision & Recent Trends

Back in March 2025, the interest rate was 2.75%. Today’s cut marks a meaningful shift.
From our weekly market reports (e.g., the [Calgary Real Estate Market Update — Week of September 15, 2025]), we’ve seen inventory rising while sales softened slightly — trends that align with what rate cuts tend to trigger: more buying interest over time, though changes don’t happen overnight.

What You Should Do Next

If you’re shopping for a mortgage soon, now may be a good time to lock in or review variable rate options.
Always compare current rate offers from multiple lenders — some fixed-rate deals might drop in response to this policy change.
For sellers, ensure your pricing and marketing approach account for increasing buyer competition and changing affordability calculations.

Final Thoughts

A 25-basis point cut by the Bank of Canada is a positive sign for many Calgary homeowners and buyers. It eases some cost pressures and encourages market activity. But economic headwinds remain, and inflation / trade risks are still part of the conversation. If you’re considering a mortgage, home purchase, or sale, the time to get informed and act carefully is now.

Curious how this rate cut affects your buying or selling plans in Calgary? Reach out to Ray Yang and our team for expert insights tailored to your situation.

Check out First-Time Homebuyer Tips for more insights.

Posted by Ray Yang on September 17th, 2025