Bank of Canada Cuts Rates to 2.25%: What Fraser Valley Buyers and Sellers Need to Know

The Bank of Canada announced another quarter-point rate cut today, bringing the policy rate down to 2.25%—a full percentage point lower than where we started 2025. For Fraser Valley homebuyers, this offers modest relief on borrowing costs. However, in a housing market where prices remain significantly elevated compared to pre-pandemic levels, and with economic uncertainty affecting household budgets across the region, it warrants a closer look at what this means for buyers, sellers, and homeowners.

The Economic Context Behind the Rate Cut

Governor Tiff Macklem's October 29, 2025 announcement didn't sugarcoat the decision. The reduction to 2.25% comes alongside acknowledgment that Canada faces what he called a "structural adjustment"—slower economic growth driven by trade challenges, reduced immigration targets, and weaker business investment.

While economists and central bankers use terms like "structural adjustment," the reality for many Canadian households is more direct: job market uncertainty, rising costs for essentials, and financial strain. According to Food Banks Canada's 2025 HungerCount report, usage reached its highest level on record, and for a significant portion of the population, homeownership remains out of reach regardless of interest rate movements.

Affordability Gap vs. Rate Relief

Lower rates ease monthly costs but don't offset years of price growth or stagnant wages. This is the core tension in today's market: while borrowing becomes cheaper, the fundamental barrier for many would-be buyers remains unchanged.

What Lower Rates Actually Mean for Your Mortgage

The practical impact: borrowing costs are decreasing. Variable-rate mortgages will see immediate relief, and fixed-rate pricing will likely improve in the coming weeks as lenders adjust their offerings.

For a buyer purchasing a home in the $800,000 to $1 million range—common in Langley, Surrey, and Abbotsford—a lower rate can reduce monthly payments by several hundred dollars. That's meaningful relief for qualified borrowers.

But here's the reality: lower rates don't solve the qualification barrier. If a household couldn't qualify at higher rates due to income constraints, debt levels, or credit issues, a quarter-point reduction may not change that calculation significantly. And for those still trying to save a down payment, rate changes don't address that hurdle at all.

"Interest rates are one piece of the affordability puzzle. For many would-be buyers, the bigger challenges are income adequacy, down payment savings, and employment stability—factors that rate cuts don't directly address."

Fraser Valley Market Conditions: September 2025 Data

According to the Fraser Valley Real Estate Board (FVREB) September 2025 Statistics Report, the month delivered market conditions that favour buyers more than we've seen in several years—but "buyer's market" doesn't mean "affordable market."

Key numbers from September:

• Benchmark price: $926,300 (down 5.4% year-over-year, sixth consecutive monthly decline)
• Active listings: 10,583 (highest level in a decade, up 17% from last year)
• Sales-to-active listings ratio: 9% (well into buyer's market territory; balanced range is 12-20%)
• New listings: Up 23% month-over-month as sellers returned to the market

The takeaway: buyers have more selection and negotiating leverage than they've had since before the pandemic. Average days on market have lengthened, expanding buyers' negotiating power. But the prices buyers are negotiating from remain substantially elevated compared to 2019 levels.

Where Market Conditions Stand by Community

Neighbourhood-level data from SnapStats September 2025 Fraser Valley Market Summary reveals significant variation in market conditions across the region. Some areas show balanced conditions, while others remain firmly in buyer's market territory.

September 2025 Market Summary (SnapStats)

Surrey: Strong Buyer Leverage

Surrey detached homes show a 7% sales ratio—meaning buyers have considerable negotiating power. Homes are selling an average of 3% below asking price in 21 days. The median sale price of $1,375,000 shows the market segment where most activity occurs, though entry-level buyers will find limited options at these price points.

Townhomes and condos offer more accessible entry points, with a 10% sales ratio and homes selling 1% below list. North Surrey condos benchmark at $443,800, representing the most affordable option for first-time buyers, though competition exists even at this level with a 9% sales ratio.

White Rock & South Surrey: Premium Markets See Adjustment

Even premium areas show buyer's market conditions. Detached homes have a 6% sales ratio with properties selling 4% below list. The benchmark of $1,777,900 (down 8.1% year-over-year) remains well above most household budgets, but buyers in this segment have significant leverage.

Attached homes show an 11% sales ratio at a $661,500 median—still a buyer's market, with pockets of relative strength in Sunnyside Park and Crescent Beach showing 27-28% sales ratios.

Langley: Approaching Market Balance

Langley shows a 13% sales ratio for detached homes—approaching balanced market territory. Homes sell 3% below list in 22 days, with a $1,432,950 median. Walnut Grove shows stronger seller conditions with a 33% sales ratio, indicating this pocket is tightening while other areas remain buyer-friendly.

Townhomes in the $600,000-$700,000 range show an 11% sales ratio, providing somewhat more accessible price points for buyers who can manage this entry level.

Abbotsford: Relatively More Accessible

Abbotsford detached homes trade at a 10% sales ratio with a median of $1,050,000—the most affordable detached market in the Fraser Valley, though "affordable" remains relative given household income levels in the region.

Condos benchmark at $415,900 (down 4.1% year-over-year), representing genuine entry-level pricing for qualified buyers. A 13% sales ratio indicates balanced market conditions.

Mission: Balanced Conditions

Mission offers balanced market conditions with an 11% sales ratio and homes selling at 100% of list price. The $995,000 median for detached homes represents better value compared to other Fraser Valley markets, though buyers should consider commute times and local employment options when evaluating this market.

What This Means for Different Buyer Profiles

For First-Time Buyers: Lower rates help with affordability calculations, but the down payment hurdle remains substantial. Even with improved negotiating conditions, saving 5-20% of a $600,000-$900,000 purchase price is a significant challenge. Those with stable employment, existing savings, and family support may find current conditions workable. Others may need to continue building savings or consider alternative paths to ownership.

For Move-Up Buyers: If you have existing equity and secure employment, current conditions provide reasonable timing for a move. Lower rates improve your buying power while buyer's market conditions give you negotiating leverage. However, selling your current home may take longer and require competitive pricing.

For Investors: Lower rates improve cash flow calculations, but consider the broader economic picture. Rental demand remains present, but economic uncertainty could affect tenant stability. Due diligence on specific properties and locations is essential—don't rely solely on favourable interest rates to justify an investment.

For Sellers: What to Expect

Current market conditions require realistic pricing and preparation. With 10,583 active listings and a 9% sales-to-active listings ratio, buyers have substantial selection and negotiating power.

Here's where sellers may see more success:

• Walnut Grove (Langley): 33% sales ratio indicates sellers still have leverage in this pocket
• Surrey ($1M-$1.25M range): 27% sales ratio shows the strongest demand in this price bracket
• Mission townhomes: 19% sales ratio with homes selling at list price
• Fleetwood-Tynehead townhomes: 20% sales ratio shows balanced conditions

In deeper buyer's markets like South Surrey/White Rock detached (6% ratio) or Surrey Central (7% ratio), aggressive pricing is necessary. Overpriced listings will sit. Homes priced in line with current conditions are typically selling within 21–28 days.

Work with a Realtor who understands current SnapStats data and can price your home based on actual sold comparables, not on what you hope to achieve or what neighbors listed for unsuccessfully.

Looking Ahead: What to Consider

The Bank of Canada's rate cuts offer modest relief for qualified borrowers on borrowing costs, and market conditions currently favour buyers more than in recent years. However, several factors warrant caution:

• Economic uncertainty: "Structural adjustment" is a diplomatic way of describing slower growth and challenges ahead
• Employment stability: Reduced immigration and weaker business investment may affect job markets
• Affordability fundamentals: Lower rates help, but they don't fundamentally solve the challenge of elevated prices relative to incomes
• Potential for further correction: No guarantee that prices have bottomed—continued economic softness could lead to additional declines

For those considering a purchase, the decision should be based on your specific financial situation, employment stability, and long-term plans—not just on interest rate movements or fear of missing out.

"Buy when you're financially ready and have long-term plans for the property. Don't buy because rates went down or because someone told you this is the 'right time.' The right time is when your specific circumstances support homeownership."

Fraser Valley's housing market continues to evolve quickly—follow our monthly updates for new data, analysis, and strategy insights.

For more balanced perspectives on Fraser Valley real estate, explore our Building Home Equity blog.

Data Sources & Verification: Market statistics from FVREB September 2025 Stats Report and SnapStats September 2025 Summary. Economic data from Bank of Canada, Statistics Canada, and Food Banks Canada. Data last verified: October 29, 2025