We thought we had it all lined up: the perfect home, the perfect mortgage, the perfect plan. Then the Bank of Canada raised interest rates — again — and everything unraveled.
This is a story about what it’s really like to buy a home in 2025.
The House That Felt Like Home
It was a 3-bedroom townhouse in Mississauga. Nothing fancy, but it had a little backyard, great schools nearby, and enough space for our growing family. Listed at $799,000 — a stretch, but manageable. We got pre-approved at 5.89% back in April and made a conditional offer.
When it was accepted, we were ecstatic. We even celebrated with cheap prosecco.
The Rate Hike That Crushed the Dream
Then, in May, the Bank of Canada made its move: a 0.5% hike to the policy rate. Suddenly, our 5.89% pre-approval expired. By the time we got a new quote, we were looking at 6.59%.
The difference? About $380 more a month.
Not catastrophic, but it broke our budget. We had already maxed out on the down payment and couldn’t afford the higher monthly payments without cutting into daycare and groceries. Our lender gave us the hard truth: we no longer qualified for the mortgage amount needed.
So we backed out. Lost our inspection deposit. And watched the house go back on the market.
We’re Not Alone
According to Redfin and Zoocasa data, nearly 17% of home deals across North America were canceled in June 2025 — the highest in a year. Rate hikes are making it harder for average buyers to keep pace.
“A 0.5% increase may not sound like much, but on a $700K loan, it’s a game-changer,” says real estate broker Mark Liu. “Buyers are getting blindsided mid-process.”
In Ontario, deals falling apart during financing have jumped 30% compared to 2024.
What We’ve Learned
We’re still renting. Still watching listings. But we’re more cautious now.
If you’re house hunting in 2025, here’s our advice:
- Lock in your rate — early. And confirm how long it’s valid.
- Leave room in your budget. Rates are unpredictable.
- Read the fine print on your offer. Get strong contingencies for financing.
Final Thoughts
Buying a house used to be about location, budget, and taste. Now it’s a race against the central bank. One rate hike wrecked our plans — and we’re just one story out of thousands.
If you’re in the same boat: you’re not crazy, and you’re not alone.
As one Redditor in r/REBubble put it:
“In April alone, 56,000 home purchase contracts were canceled — equal to 14.3 percent of all pending deals… Spooked by high mortgage rates, mounting insurance premiums, and growing fears of a shaky economy, an astonishing one in seven buyers are bailing at the last minute.”
We’re keeping the paddle ready, just in case.
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.
