The Bank of Canada (BoC) delivered its latest interest rate decision on October 29, 2025. It lowered the target for the overnight rate by 25 basis points to 2.25 per cent. While the cut offers immediate relief, the accompanying announcement was arguably more significant. Governor Tiff Macklem suggested the central bank is done cutting rates for now, positioning the current rate “at about the right level.” For anyone involved in the local housing market, this shift from rate cuts to stability is monumental. Specifically, this sets the stage for the Fraser Valley real estate forecast 2026.

1. Lower Rate: Smaller Payments Drive Confidence

The 25-basis-point cut immediately impacts variable-rate mortgages. As the BoC lowers its rate, Canada’s major banks will typically reduce their Prime Rate by the same amount.

  • Immediate Relief: This translates to an instant reduction in interest costs for anyone with a variable mortgage. Consequently, homeowners will see thousands of dollars in interest savings over the life of their loan. This directly boosts household cash flow.
  • Stability for Buyers: The new 2.25% floor removes the uncertainty that plagued the market earlier this year. Buyers are no longer waiting to time the bottom of the rate cycle. Therefore, this increases the potential for sales activity now and improves the Fraser Valley real estate forecast 2026.

2. The BoC’s Caution and the 2026 Outlook

Governor Macklem was clear: the central bank’s policy “cannot undo the damage caused by tariffs.” This refers to the structural economic changes resulting from the trade conflict. This caution is key when interpreting the BC housing market forecast. However, while the rates are stable, the broader economic weakness will likely prevent the market from experiencing a sudden boom.

The BoC anticipates:

  • Weak GDP growth in the second half of 2025.
  • The labour market to remain soft.
  • Inflation to stay close to the 2% target, offsetting cost pressures from trade.

This balancing act suggests that the market stability will foster healthy recovery in the coming year. Furthermore, this aligns with predictions from BCREA that anticipate a significant rebound in sales volume in 2026.

3. Positioning for the Rebound: What the Stability Means

The current rate level is likely the benchmark for the near future. Thus, late 2025 and early 2026 are a crucial “window of opportunity” for strategic buyers and sellers.

  • For Buyers: High inventory still exists in the Fraser Valley. Stability allows buyers to shop with less competition and negotiate better terms before the projected 2026 surge in demand.
  • For Sellers: The pause in rate cuts attracts buyers off the fence, injecting renewed confidence and activity into the market. Homes priced strategically are expected to perform well leading into the expected strong year for the Fraser Valley real estate forecast 2026.

The Bank of Canada’s decision confirms that the period of aggressive rate adjustments is over. Ultimately, this stability provides a solid foundation for what is expected to be a much stronger year in the Fraser Valley real estate forecast 2026.

If you have questions about how this interest rate change might affect your plans to buy or sell, please give me a call. I’m here to help you navigate the ever-changing market and ensure you make the best financial decisions. Check out my current listings here!