How 2025 Mortgage Trends Are Reshaping Home Renovation and Buying Decisions

This article is for informational purposes only and does not constitute financial, legal, or investment advice. Mortgage rates, home prices, and market conditions can vary significantly based on location and individual circumstances. Readers should consult with licensed mortgage advisors or financial professionals before making any decisions. All statistics referenced are current as of the date of publication.

As we navigate through 2025, Canadian homeowners and buyers are facing a complex—but promising—economic landscape. Mortgage rates have eased from last year’s peak, home prices have adjusted, and bond yields continue to send signals about the future of fixed-rate mortgages. For those considering whether to renovate, buy, or wait, understanding the impact of current mortgage trends is more crucial than ever.

At Imperio Construction, we’re not just builders, engineers and designers—we’re long-term partners in helping you make smart decisions about your home. In this article, we’ll break down the key trends in Canada’s mortgage market and how they’re reshaping the way people approach renovations, custom home builds, and property purchases in 2025.

🧩 Understanding the Mortgage Landscape in Mid-2025

🔻 Rates Are Down—But Not Out

Let’s start with one of the most impactful shifts: the drop in mortgage rates.

According to Outline Financial’s Mortgage & Economic Outline – May 2025, the average 5-year fixed mortgage rate has fallen from 5.19% in April 2024 to 4.09% in April 2025. While this may seem like a modest decline, the implications for affordability are significant.

At the same time, the average condo price in the Greater Toronto Area (TRREB data) dropped from $727,734 to $678,048. That’s nearly $50,000 in reduced cost, plus a full percentage point drop in interest rates—translating to substantially lower monthly payments and stress test thresholds.

These figures have sparked renewed interest in both purchasing and refinancing—creating opportunities for major home decisions that were previously out of reach.

📉 Bond Yields & Market Volatility: What They Mean for Fixed Rates

The 5-year Government of Canada bond yield, a key driver of fixed mortgage rates, has experienced major volatility in 2025. In just a few months:

• February peak: 2.89%

• April low: 2.50%

• May rebound: 2.98%

This volatility, fueled by tariff uncertainties and inflation data, has meant fluctuating access to rate discounts and lender flexibility.

🛡️ Strategy for Homeowners:

Secure a rate hold early—especially if you're planning a renovation or new build. This ensures you can capitalize on today’s lower rates while staying insulated from future hikes.

💡 Fixed vs. Variable: How Canadians Are Choosing in 2025

The latest mortgage origination trends reveal a steady rise in variable-rate mortgage selections since mid-2024:

• 25% of new mortgages are variable

• 28% are 5-year+ fixed

• The rest are spread across shorter-term fixed products

While variable rates are still lower than fixed in many cases, uncertainty over the Bank of Canada’s next moves has made many homeowners lean toward shorter-term fixed options—a flexible middle ground.

For those planning custom construction or large-scale renovations, short-term fixed or variable financing can offer the agility needed to respond to market changes, project delays, or phased construction timelines.

🏗️ Renovate or Buy? What Today’s Trends Suggest

With home prices adjusting and interest rates softening, many Canadians are wondering: Is now the right time to buy, or should I renovate what I have?

Let’s break it down:

✅ Reasons to Renovate

• 2025 CMHC data shows:

  • 74% of mortgage renewers plan to renovate in the next 5 years

  • 77% of refinancers plan to do the same

• Falling interest rates create attractive conditions for refinancing to fund renovations

• Homes built in the early 2000s are reaching the age where key systems (roofing, HVAC, plumbing) need updating

At Imperio Construction, we’ve seen a spike in demand for:

• Energy-efficient retrofits

• Basement apartments / secondary suites

• Multigenerational renovations for aging parents or adult children

✅ Reasons to Buy or Build New

• Lower average purchase price gives buyers more flexibility to invest in custom features

• New construction avoids many of the risks associated with older homes (asbestos, knob-and-tube wiring, energy inefficiency)

• Custom homes allow for smarter space planning, accessibility, and long-term growth

Imperio’s Tip: If your current home lacks the layout, lot size, or structural capacity for meaningful expansion, building new may be more cost-effective than extensive renovation.

🔎 Inflation and Core Economic Indicators: What to Watch

The Bank of Canada’s inflation targets remain a key influencer of interest rate policy:

• Headline inflation (CPI) for April 2025: +1.7%

• Core inflation (CPI-Trim and CPI-Median): now at 3.1–3.2%, exceeding the BoC’s comfort zone

This discrepancy suggests persistent price pressures, especially in non-energy sectors. While energy cost relief has helped short-term affordability, rising wages, materials, and service costs still pose long-term inflation risks.

🗓️ Economic Dates to Watch (Mid–Late 2025)

If you're considering building, renovating, or refinancing this year, stay informed on key dates that could affect your decisions:

• June 24 – Canada CPI (inflation) update

• July 10 – Bank of Canada rate announcement

• September – TRREB Fall Housing Market Outlook

• Ongoing – US Fed rate decisions (influence Canadian bond markets)

Imperio Construction monitors these shifts closely so we can advise our clients on optimal timelines for budgeting, financing, and execution.

🏡 How Imperio Construction Helps Clients Navigate These Changes

Whether you're planning a renovation or new build, market uncertainty shouldn't hold you back. At Imperio, we provide:

✅ Transparent estimates with built-in contingency ranges

✅ Project scheduling tied to market cycles and funding timelines

✅ Design guidance to maximize home value and functionality in today’s climate

✅ Partnerships with trusted mortgage advisors for seamless financing integration

Our approach is informed by both market data and hands-on experience—ensuring your home investment is grounded in financial strategy as much as great design and construction.

The 2025 mortgage landscape offers a rare window: falling rates, easing prices, and strong long-term housing fundamentals. Whether you’re considering refinancing to fund a renovation or planning a custom build, staying informed—and working with the right construction partner—can make all the difference.

🏢 About Imperio Construction

Imperio Construction is a Toronto-based design-build firm dedicated to delivering exceptional residential and commercial projects across the Greater Toronto Area. With over a decade of experience, our team specializes in custom homes, large-scale renovations, and full-service project management, guiding clients from concept to completion with integrity, craftsmanship, and transparency.

Our team is made up of passionate architects, designers, engineers, and project managers who work collaboratively to create beautiful, functional spaces tailored to each client’s lifestyle and goals. At Imperio, we believe in building lasting relationships as much as we believe in building exceptional spaces—and that starts with listening, communicating clearly, and delivering on our promises.

Whether you’re planning a full home renovation or building your dream home from the ground up, Imperio Construction is your trusted partner for expert guidance, innovative design, and unmatched quality.