Wondering how a 25–50 basis point Bank of Canada rate cut actually changes your mortgage payment? See side-by-side numbers for $600K and $800K mortgages on a 25-year amortization, plus quick context on stress-test qualifying and what this means for delinquencies and affordability.
- A 25 bps (0.25 percent) cut typically trims ~$85–$125 per month per $600K–$800K of mortgage at today’s mid-5 percent range on a 25-year amortization.
- A 50 bps cut roughly doubles the monthly relief (think ~$175–$240 per month on $600K–$800K).
- Cuts help both variable-rate borrowers immediately and fixed-rate shoppers via lower new-money rates and (sometimes) easier qualification.
- Read next: Canadian Mortgage Delinquencies Jump 64%… (context), Mortgage Stress Test in 2025 (qualifying math), How Much Income You Need to Buy a Home in Ontario (2025) (affordability lens).
Assumptions (so you can replicate)
- Amortization: 25 years (300 months)
- Balances: $600,000 and $800,000
- “Before cut” rates shown at 4.5%, 5.5%, 6.5% to cover a realistic band of 2025 fixed/variable quotes
- We compare the same principal and amortization at the base rate vs base − 0.25% and base − 0.50%
Formula used (standard mortgage payment):
Monthly payment = P × r_m × (1 + r_m)^n ÷ [(1 + r_m)^n − 1], where r_m = annual rate ÷ 12 and n = 300.
Chart 1 (table): $600K mortgage — monthly payment impact
25-year amortization
| Base rate | Before cut | After −25 bps | After −50 bps | Monthly savings (−25) | Monthly savings (−50) | Annual savings (−25/−50) |
|---|---|---|---|---|---|---|
| 4.50% | $3,335 | $3,250 | $3,167 | $85 | $168 | $1,015 / $2,016 |
| 5.50% | $3,685 | $3,595 | $3,508 | $89 | $177 | $1,068 / $2,124 |
| 6.50% | $4,051 | $3,958 | $3,866 | $93 | $185 | $1,119 / $2,225 |
Chart 2 (table): $800K mortgage — monthly payment impact
25-year amortization
| Base rate | Before cut | After −25 bps | After −50 bps | Monthly savings (−25) | Monthly savings (−50) | Annual savings (−25/−50) |
|---|---|---|---|---|---|---|
| 5.50% | $4,913 | $4,794 | $4,677 | $119 | $236 | $1,425 / $2,832 |
Rule of thumb: Around today’s mid-5 percent rates, each 25 bps ≈ $15–$20 per month per $100K of mortgage on a 25-year amortization. Scale the savings up or down by your balance.
What this means for you (variable vs fixed)
- Variable-rate holders: Payment relief can be immediate if you’re on an adjustable-payment variable. If you’re on a static-payment variable, a cut reduces the share going to interest and helps reverse negative amortization risk.
- New fixed-rate shoppers: Lenders price fixed from the bond market, but BoC cuts often improve rate sentiment and qualifying over time. Even a 25–50 bps drop meaningfully improves the payment-to-income ratio in tight files.
See: Mortgage Stress Test in 2025 for how qualifying at the higher of 5.25% or contract + 2% interacts with falling rates.
Why it matters for delinquencies and affordability
- Payment relief reduces pressure on households at renewal and on those already stretched.
- Lower payments can slow the rise in mortgage delinquencies, though job market and income trends still dominate outcomes.
- For buyers, a smaller payment at the same price expands the feasible price band or reduces required income (see How Much Income You Need to Buy a Home in Ontario (2025)).
Read for context: Canadian Mortgage Delinquencies Jump 64% in Two Years — And It’s Worse Than It Looks.
Quick planner: turn the tables into your numbers
- Find your current/quoted rate (e.g., 5.49%).
- Pick the closest row above as a baseline.
- Scale the monthly savings by your balance (use the rule of thumb: ~$15–$20 per month per $100K per 25 bps at mid-5s).
- Multiply by 12 for annual impact, and by remaining term months for the rest-of-term impact.
FAQ
Do rate cuts always lower my payment?
- If you’re variable, yes—directly or indirectly depending on your payment type. If you’re fixed, your payment changes at renewal or if you refinance/early-renew.
Will 25–50 bps reopen the market?
- It helps. At the margin, lower payments and improved qualifying can add buyers back, especially in entry-level segments.
Is it better to wait for more cuts?
- Time in market vs timing the market: rate moves are hard to predict. If the math works now (payment share of income, buffers, rates), consider moving ahead.
Methodology & notes
- Payments calculated with standard amortization math, 25 years, compounded monthly.
- Actual lender quotes vary by credit profile, property type, term, and rate type.
- For insured mortgages (down payments under 20 percent), premiums affect the effective principal, adjust your balance accordingly.
The next Bank of Canada rate decision is scheduled for December 10, 2025. Until then, buyers, sellers and homeowners should keep an eye on mortgage rate updates and bank forecasts. Even a small change in the policy rate can shift affordability, so it is worth checking in with your lender or broker as that date gets closer.
Canada Housing Market 
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