{"id":82574,"date":"2025-12-10T07:03:42","date_gmt":"2025-12-10T15:03:42","guid":{"rendered":"https:\/\/www.nerdwallet.com\/ca\/?page_id=82574"},"modified":"2025-12-10T07:03:50","modified_gmt":"2025-12-10T15:03:50","slug":"bank-of-canada-rate-analysis-december-2025-shaky-status-quo-for-housing","status":"publish","type":"page","link":"https:\/\/www.nerdwallet.com\/ca\/mortgages\/bank-of-canada-rate-analysis-december-2025-shaky-status-quo-for-housing","title":{"rendered":"Bank of Canada Rate Hold: A Shaky Status Quo for Housing"},"content":{"rendered":"\n

After cutting its overnight rate in September and October, the Bank of Canada held firm on December 10, 2025, maintaining its key lending rate at 2.25%.<\/p>\n\n\n\n

The Bank\u2019s inaction today might disappoint home buyers hoping for even lower mortgage rates, but a third consecutive rate cut was never really on the table.\u00a0<\/p>\n\n\n\n

The Canadian economy has shown modest signs of life lately \u2014 manufacturing sales grew a healthy 3.3% in September, unemployment dipped back under 7% in October \u2014 and the Bank risks higher inflation if it cuts too aggressively. <\/p>\n\n\n\n

Without additional rate cuts, a significant rebound in home sales seems unlikely. Even though today\u2019s inventory-rich market favours buyers, conservative underwriting and broad economic uncertainty remain significant barriers.<\/p>\n\n\n\n

With current mortgage rates<\/a> likely to stay put until at least January 28, the BoC\u2019s first rate decision of the new year, housing sales will be hamstrung by consumer debt and sentiment, neither of which are heading in the right direction.<\/p>\n\n\n\n

Falling (further) behind<\/h2>\n\n\n\n

Recent data shows that Canadians are struggling to keep up with their debts. At a time when lenders are exercising extreme caution about who they lend to, missed credit payments aren\u2019t just a red flag. For some lenders, they\u2019re a stop sign. <\/p>\n\n\n\n

In the third quarter of 2025, 1.45 million Canadians missed a credit payment, over 46,000 more than in the second quarter, according to Equifax Canada. A whopping 84% of those who missed a payment were non-homeowners. <\/p>\n\n\n\n

And now we’re headed into the holidays, a time of extra spending that often swells high-interest debt. <\/p>\n\n\n\n

More than half of 2024 Canadian holiday shoppers (56%) incurred holiday credit card debt last year, and more than a quarter of them (28%) are still paying off last year\u2019s gifts, according to NerdWallet Canada’s 2025 Holiday Spending Report<\/a>. <\/p>\n\n\n\n

While a single missed payment won\u2019t doom a mortgage application at many lenders, ongoing delinquency<\/a> will. Equifax found that the long-term delinquency rate (90 days or more past due) in Q3 was 1.63% \u2014 14% higher than a year before. <\/p>\n\n\n\n

Long-term delinquency is rising fastest among young Canadians, who should be making up the country\u2019s next crop of first-time home buyers. Among 26 to 35-year olds, the 90-plus-day non-mortgage delinquency rate was up 20.51% year-over-year in Q3. <\/p>\n\n\n\n

Anyone in this growing cohort isn\u2019t in a position to get a mortgage, either by their own estimation or by most lenders\u2019. Qualifying will require finding a sympathetic alternative lender, who will likely require a 20% down payment. <\/p>\n\n\n\n

Finding that kind of capital would be a stretch for most people, let alone someone unable to pay down a credit card.<\/p>\n\n\n\n

This isn\u2019t an issue a rate cut can solve. An ideal (and perhaps the only) fix would be an explosion of good jobs and wages high enough to offset the punishing cost of living. <\/p>\n\n\n\n

If Canadians can\u2019t save, they can\u2019t pay off their debts. And if they can\u2019t pay off their debts, who\u2019s giving them a mortgage?<\/p>\n\n\n\n

Fear of what\u2019s coming<\/h2>\n\n\n\n

Sinking their life savings into a home purchase is a risk many Canadians would be willing to take, especially when mortgage rates are at or below historical norms.<\/p>\n\n\n\n

But a negative view of the economy and one’s own financial situations create a potential drag on housing demand<\/a>. And those views aren\u2019t uncommon:<\/p>\n\n\n\n