As of early May 2025, with the federal election decided and Mark Carney leading a minority government, my answer is that the market's stillness was mostly the tariff war and not politics. The Bank of Canada had just held its policy rate at 2.75%, and I expected half a point to three quarters of a point of cuts by the end of 2025. A gradual thaw, not a rush.
I am Moe Asgarian, a real-estate broker in Toronto ranked #47 worldwide at RE/MAX. After months of waiting, members of Parliament were finally sitting in sessions again and things were getting a little more normal. But is everything really going back to normal? Here are the three post-election questions I was asked most in the spring of 2025, and my own read on the months to the end of that year.
Will Buyers Feel More Confident Now That the Election Is Over?
That was the million dollar question in early May 2025, and the honest answer is that nobody could say with certainty. The worry was that everything still hung on the tariff war, which for most households was priority number one. My own view is that a large share of the market's lack of movement came from the trade war and that political uncertainty was a smaller part of the story. Look at the timing: the freeze arrived immediately after the tariff fight started, and yes, Justin Trudeau's resignation made it worse.
From the analysis I was reading in the spring of 2025, my read was that the ice melts slowly. I do not mean everyone pours into the market tomorrow. I mean that every day forward brings a clearer picture of where the tariffs land. Honestly, I did not think the American president would make a decision that left the situation worse than it already was. So in May 2025 I was neither convinced that holding the election had settled everything nor particularly pessimistic. Both you and I know that across the border comments come daily and many of those decisions are not predictable at all. Even so, I put better odds on Carney reaching some agreement with Trump than on a serious trade war.
What I Expected From the Bank of Canada Through the Rest of 2025
At its last meeting before early May 2025 the Bank of Canada decided not to touch the policy rate, leaving it at 2.75%. What comes after that was the second question. Based on the forecasts bank and mortgage analysts were publishing in early 2025, I had pointed to the figure of 2% several times. As of May 2025 I still thought the scenario of the policy rate travelling from 2.75% down to 2% by the end of 2025 was highly likely.
The reason is the economy. Investment conditions and economic activity in Canada were poor in the spring of 2025, and given the data the Bank was going to see, my expectation was two or three more cuts, somewhere between half a percentage point and three quarters of a percentage point in total, which would end 2025 with a policy rate close to 2%. Neither we nor the people inside the central bank know this answer exactly. If the economy were to outperform, the Bank would rather leave the rate alone, but as of early May 2025 there was no sign pointing to a rate that stays still. For households, lower rates mean variable loans get cheaper and buying a home gets easier than it was.
Variable and Fixed Mortgage Rates Do Not Move Together
Pay attention to this, because it is where people get surprised. Mortgage rates behave differently depending on whether they are fixed or variable. As I said, a variable rate comes down directly when the policy rate comes down. Fixed rates do not necessarily fall at the same speed or by the same amount. In the spring of 2025 that was a real decision and not a technicality: a borrower had to weigh the certainty of a fixed payment against the likelihood of further cuts, and the right answer depended on how long that household planned to hold the property and how much payment risk it could absorb.
Productivity, Jobs and Immigration: Canada's Other Worries in 2025
The third question is about the rest of Canada's problems. We had two obvious ones in the spring of 2025: the wait for the election, which was held and more or less settled, and the tariff fight, which was still live. But Canadian economists had other worries. I was seeing reports and notes on low productivity in Canada almost daily. The specific concerns were the labour market and the immigration policies of the past few years, which even the Liberals say were not handled correctly.
Underneath all of it sits a general question: what future do Canadian industry, the economy and the financial markets actually have? Does serious capital come into the country? Do we see economic growth? As of May 2025 it looked as though Canada would not be returning to its good days any time soon, and those worries were still sitting there, unanswered.
What the February 2025 Economic Numbers Showed
The statistics give a sharper picture than the mood does. Reports showed that Canada's economy had a small decline in February 2025 and crossed into negative territory, with the drop in GDP touching 12 of the country's 20 main industries. That is the hard part. The hopeful part is that conditions were improving again and growth in the following months looked likely to continue.
Two things still concerned me in May 2025. The first was home sales falling for a third consecutive month as of May 2025. The second was the slowdown in construction, which is something worth repeating until it is fixed, because the homes not built in a quiet year are the ones missing in a busy one.
Why a Rate Cut Would Matter to Investors and Landlords
My view in May 2025 was that a rate cut at the Bank of Canada's next meeting would also reassure investors that they can come into this market and make money. The mechanism is simple. Borrowing is cheaper, the monthly carrying cost for an owner goes down, and that means more profit from rent on the same property. That is the arithmetic that brings investors back before sentiment does.
If these points are useful and you want them applied to your own purchase, sale or rental numbers, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.
Frequently asked questions
Did the 2025 federal election unfreeze Canada's housing market?
Not on its own. As of early May 2025 it was too soon to say with certainty. Most of the market's stillness that spring traced back to the trade war, with political uncertainty a smaller part of it, because the freeze arrived right after the tariff fight began and deepened when Justin Trudeau resigned. The reasonable expectation in May 2025 was a gradual thaw as the tariff picture became clearer, not a rush of buyers.
Where was the Bank of Canada policy rate heading after May 2025?
The Bank of Canada left its policy rate untouched at 2.75% at its meeting before early May 2025. My expectation then was two or three further cuts totalling between half a percentage point and three quarters of a percentage point, which would end 2025 near 2%. As of May 2025 the scenario of the rate travelling from 2.75% to 2% by the end of that year looked highly likely, although if the economy were to outperform the Bank would prefer to hold instead.
Do variable and fixed mortgage rates fall at the same speed?
No. When the Bank of Canada cuts, variable mortgage rates come down directly, which was the case through the 2025 cutting cycle. Fixed rates are set differently and do not necessarily fall as fast or as far. A borrower choosing between them in May 2025 had to decide how much certainty was worth, not just which number looked lower on the day.