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Canada’s economy shed over 65,000 jobs in August, pushing the unemployment rate to 7.1%, a 9-year high outside of the pandemic. This sharp rise in joblessness is sparking strong expectations that the Bank of Canada may lower interest rates at its next announcement on September 17, 2025.
For buyers, sellers, and investors in Vancouver and across the Lower Mainland, a rate cut could shift the landscape.
August Job Numbers: What Just Happened?
The latest report from Statistics Canada signals widespread weakness in the job market:
- Unemployment rate rose to 7.1%, the highest since 2016 (excluding 2020-21).
- Total jobs lost: 65,500, mostly part-time and spread across several sectors.
- Participation rate fell to 65.1%, while the employment rate dropped to 60.5%.
Sectors Most Affected
- Professional, scientific & technical services
- Transportation and warehousing
- Manufacturing
The construction sector was a rare bright spot, adding 17,100 jobs, a signal of continued demand in housing and infrastructure.
Why This Matters for Interest Rates
Economists and financial markets are now betting that the Bank of Canada will cut rates this month. Here’s why:
- Labour market weakness indicates slower economic activity.
- Despite solid wage growth (+3.6% year-over-year), the loss of jobs adds downward pressure on inflation.
- Market probability of a rate cut at the September 17 meeting now exceeds 90%.
This shift would mark a turning point in Canada’s monetary policy, and a key opportunity for mortgage holders and real estate participants.
What a Rate Cut Could Mean for You
Homebuyers
- Lower borrowing costs: A 0.25% cut could save hundreds per month on variable-rate mortgages.
- Improved affordability: Eased stress test benchmarks may expand buying power.
- Less urgency from competition, for now.
Sellers
- More motivated buyers may re-enter the market.
- Better financing conditions can support higher price ceilings.
Investors
- Cap rate spreads improve with lower interest costs.
- Financing pre-sales or multiplexes becomes more attractive.
- May signal the beginning of a stimulus phase, lifting rents and values long-term.
Key Takeaways
- Unemployment spike points to an economic slowdown, raising chances of a Bank of Canada rate cut on Sept. 17.
- Lower rates could improve affordability, unlock pent-up buyer demand, and reignite investor interest.
- Now is a critical window to reassess financing options and investment strategies.
FAQs
Will the Bank of Canada cut interest rates in September 2025?
Based on August’s labour data and market sentiment, there’s a 90%+ probability of a rate cut at the September 17 meeting.
How does unemployment affect mortgage rates?
Rising unemployment signals economic weakness, which often prompts central banks to lower interest rates, leading to potential drops in variable mortgage rates.
Is it a good time to buy real estate in Vancouver or the Lower Mainland?
With the potential for rate cuts, buying conditions may improve in the short term. Lower rates increase affordability and could stimulate more market activity.
What should sellers do if rates are cut?
A cut can attract more buyers, especially those waiting on the sidelines. Sellers may want to list now to capture early renewed interest.
Ready for the Shift? Let’s Talk Strategy
Whether you’re buying, selling, or investing, the potential for a rate cut could reshape your next move. Sayed Najibi helps clients navigate these shifts with insight and strategy, so they stay ahead of the market, not chasing it.
Contact Details
Sayed Najibi
Personal Real Estate Corporation
Phone: 604-649-6520
Website: www.sngroup.ca