Interest Rate Cuts in 2025: How Lower Borrowing Costs Are Shaping the Calgary Real Estate Market

Why Interest Rates Matter for Buyers and Sellers

Interest rates directly affect mortgage affordability. Every 0.25% cut in the Bank of Canada’s policy rate can reduce monthly mortgage payments, making it easier for buyers to qualify and increasing overall demand. For sellers, lower rates often bring more showings, quicker sales, and stronger offers.

In Calgary’s 2025 market, affordability remains top of mind. With borrowing costs trending downward, buyers and sellers alike should understand how rate changes translate into real-world opportunities.

How a 0.25% Rate Cut Affects Your Monthly Payment

Let’s break down an example:

• Mortgage Amount: $500,000

• Amortization: 25 years

• At 5.50%: Monthly payment ≈ $3,045

• At 5.25%: Monthly payment ≈ $2,955

That’s a savings of $90 per month — or $1,080 per year. For larger mortgages closer to Calgary’s average detached price, the savings can be even more significant.

These reductions improve buyer qualification under the mortgage stress test and free up household budgets for other expenses.

Buyer Confidence Is Rising in 2025

Lower borrowing costs are already boosting buyer sentiment. First-time buyers, who were squeezed out during peak rates in 2023–24, are cautiously re-entering the market. Condos and townhomes, with their lower price points, are seeing particularly strong demand.

However, inventory is still high in certain Calgary communities. This means buyers not only save on monthly payments but also gain negotiation power, especially on homes that have been sitting longer on the market.

Our guide on how to negotiate a home price in Calgary shows strategies you can use in 2025.

What Sellers Need to Know

For sellers, interest rate cuts bring two clear signals:

1. More Qualified Buyers: A larger pool of buyers can now afford higher price brackets.

2. Price Strategy Matters: While demand is improving, overpricing a property can still result in slow sales. Competitive, market-aligned pricing remains key.

Homes in sought-after communities like Aspen Woods, Signal Hill, and Lake Bonavista are benefiting most from renewed buyer activity. Sellers here should position their homes attractively to capture interest early.

Key Takeaways for 2025

• Each 0.25% rate cut creates tangible savings and expands affordability.

• Buyers in Calgary are regaining confidence, especially for entry-level and mid-range homes.

• Sellers should see more showings but must remain realistic on pricing.

• Timing matters: with more cuts possible in 2025, those who act earlier may face less competition.

Final Thoughts

Interest rate cuts in 2025 are reshaping Calgary’s real estate landscape. Buyers should evaluate affordability with a trusted mortgage broker, while sellers should work with experienced agents to price homes strategically.

Thinking about buying or selling in Calgary this year? Contact Ray Yang today for a personalized market analysis and to explore how today’s lower rates can work in your favour.