In 2025, the question on every Canadian’s mind isn’t just “Will the Leafs win the Cup?” — it’s “When the hell will the Bank of Canada finally cut rates?”
For homeowners, small business owners, and retail investors alike, the answer could mean the difference between financial breathing room and full-on economic suffocation. After the most aggressive rate hike cycle in decades, Canada’s policy rate remains stuck at as 5-year fixed mortgages reset from pandemic-era lows. For variable-rate holders, it’s been even more brutal — with some now seeing 60–70% of their monthly payment go to interest alone.
CMHC data shows that since 2022 highs. Volume is down, buyer interest has waned, and homeowners aren’t selling unless they absolutely have to.
Small Business: Interest Kills Momentum
A Fictional Case Study: How High Rates Strain Real Lives
Take the example of Carla, a fictional small business owner based in Hamilton, Ontario. She runs a local café that thrived during the pandemic thanks to low-interest government loans and strong community support. But in 2025, Carla faces a drastically different climate. Her $150,000 variable-rate loan has seen interest payments more than double since 2022, adding nearly $800 in monthly costs. Meanwhile, customer foot traffic is down, and her plans to expand into catering have been shelved.
Despite her café turning a modest profit, Carla’s bank has declined to extend her credit line due to tighter lending standards. She’s been forced to cut part-time staff hours, delay equipment upgrades, and dip into personal savings to keep things afloat. Her story is increasingly common across Canada — where rate pressure doesn’t just stay in the headlines, it hits local economies hard. For small and medium-sized businesses (SMBs), high rates have choked off access to credit lines and expansion loans. The . Without rate relief soon, many startups and main street employers could pull back — just when Canada needs them to grow.
Retail Investors: Playing Defense
With GICs offering , but only if inflation stays subdued and unemployment ticks higher. Core inflation remains stubbornly above the 2% target — sitting around — and with it, a potential .
Until then? Strap in. Canada’s rate pain isn’t over — but a pivot might finally be on the horizon.
(Not financial advice. But let’s be honest — you’ve thought about variable to fixed more times than you’ve had double-doubles this week.)
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website.
