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Market news · 2 min read
The Bank of Canada raised interest rates even as the economy slows, affecting GTA homebuyers and sellers. Here’s what Ontario homeowners should know.
By Alex Reid ·
Canada’s economy slowed down in the third quarter of 2026, with GDP growing at just 1.3% annualized, which is below the Bank of Canada’s 2.0% forecast. Even with this weaker economic growth, the Bank raised its overnight interest rate by 0.25% to 2.50% on October 28. This was the first rate increase since July 2023.
For people in the Greater Toronto Area, this is a tricky situation. The economy is not growing as fast as expected, yet borrowing costs are going up. Retail spending remains steady, showing that households are still buying despite higher rates. However, the overall economic signals suggest caution ahead.
Higher interest rates usually mean higher mortgage payments. For homebuyers in the GTA, this reduces how much they can afford to borrow. Many mortgages are up for renewal this year, so more homeowners will face higher payments soon. This can make buying a home more expensive and refinancing more difficult.
With the Bank of Canada expected to make its next decision in early December, the housing market could see more changes. Factors like ongoing trade issues and high energy prices add uncertainty to the outlook. Affordability, already a challenge in Ontario, will feel more pressure as borrowing costs rise.
If you’re selling a home in the GTA or elsewhere in Ontario, rising rates can affect demand. Higher mortgage costs may reduce the pool of buyers able to afford your home. This can mean homes stay on the market longer or sell for less than expected.
For sellers who want a fast and certain sale, options like direct cash offers might be worth exploring. These offers don’t require listing, showings, or repairs, and can close on a date you choose. This can be helpful if you’re facing financial pressure or want to avoid the uncertainty of the traditional market.
Understanding how rising rates affect your mortgage payments and home value is key. Free online calculators can help you estimate your new mortgage costs or the value of your home in today’s market.
If you’re thinking about selling, consider getting a quick home evaluation to see where you stand. And if you want to avoid realtor commissions or repairs, services offering direct cash offers can provide a straightforward alternative.
For more details on how rate changes impact your finances, try a mortgage payment calculator or check how much realtor fees might cost you in Ontario.
Sources
General information only, not legal, tax or financial advice. Private Deals buys homes directly and is not a real estate brokerage.
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