Should You Buy a Home Now or Wait for Interest Rates to Drop? (Ottawa Edition – May 2025)
If you’ve been thinking about buying a home in Ottawa, chances are you’ve found yourself wondering: Is now really the right time? Or should you wait until interest rates go down?
It’s a fair question. Interest rates are one of the biggest factors influencing your monthly mortgage payment, and in 2025, every dollar counts. But while rates may be gradually softening, that doesn’t necessarily mean you should wait to buy.
Here’s what Ottawa buyers really need to know.
What Are Interest Rates Doing in 2025?
As of May 2025, the Bank of Canada’s policy rate is 4.25%, following a widely anticipated 25-basis-point cut earlier this spring. Most lenders are now offering:
5-year fixed mortgage rates: ~4.59%–5.19%
5-year variable rates: ~5.70%–6.00%
Economists are predicting another potential quarter-point cut this summer, depending on inflation and economic growth. But big drops—like those we saw in 2020—are not expected anytime soon.
What Difference Does a Rate Drop Actually Make?
Let’s say you’re buying a $650,000 home in Ottawa with 20% down. That gives you a $520,000 mortgage.
Here’s how the math plays out:
At 5.25% interest (fixed), your monthly mortgage payment: $3,118
At 4.75% interest, your payment drops to: $2,962
That’s a savings of $156/month or about $1,872/year if you wait for a 0.5% rate drop. Not nothing—but likely not life-changing either, especially if home prices rise in the meantime.
Are Home Prices in Ottawa Going Up or Down?
According to the Ottawa Real Estate Board (OREB), the average residential resale home price in April 2025 was $707,178, up 3.1% month-over-month and up slightly from the same time last year.
Condo prices are also on the rise, averaging $438,103—a 4.7% year-over-year increase.
What this tells us: Ottawa’s market is stable and slowly climbing. Buyers waiting for a crash may be waiting a long time.
So… Should You Buy Now or Wait?
Let’s break it down based on where you’re at.
You Should Consider Buying Now If:
You’ve saved your down payment (ideally 5–20%)
You’ve been pre-approved and can afford monthly payments
You plan to stay in the home for 5+ years
You want to build equity instead of continuing to rent
Even with higher rates, you can often refinance later if rates drop. But you can’t go back in time and snag a home that’s increased in value.
⏳ You Might Wait If:
You’re still saving for a down payment
Your credit score needs work
You’re on an uncertain job path or your income is inconsistent
You’re hoping to buy in a very competitive price range where bidding wars still dominate
For some, waiting can provide much-needed breathing room to improve financial readiness—even if it costs a bit more later.
But What If Prices Go Up and Rates Go Down?
Let’s revisit that $650,000 home example.
If prices go up just 5% in the next year (as they did in several Ottawa neighbourhoods in 2024), your $650,000 home might cost $682,500 in 2026.
Even if rates fall 0.5%, your payment could end up similar—or higher than if you bought today at a slightly higher rate.
This is why many real estate professionals say:
“Don’t try to time the market. Time your own life.”
Final Thoughts: Make a Decision Based on You, Not the Headlines
Ottawa’s real estate market isn’t crashing, and it’s not exploding either. It’s steady, predictable, and favourable for prepared buyers—even with current interest rates.
If you’re financially ready and find a home that fits your needs and lifestyle, buying now could be the right move. If you're not there yet, use this time to strengthen your finances and build a plan.
Either way, you don’t need to figure it out alone.
Have questions about buying in Ottawa? Want help figuring out what you can afford—or if now’s the right time for you?
Reach out to our team at New Purveyors. We're here to help you make smart, confident decisions—whatever the market is doing.
