Mortgage Trends: Fixed is Back, Baby
According to Jason, 90% of borrowers are opting for fixed-rate mortgages, compared to a more even split earlier in the year. With so much economic uncertainty, global tariffs, political shifts, and inflation, the peace of mind that comes with a three- or five-year fixed term is appealing.
Buyers are also budgeting more conservatively. Gone are the days of maxing out pre-approvals just to compete. “Clients are digging deeper into the numbers,” Jason shared. “They’re asking, ‘Can we carry this on one income if something happens?'” That caution may not fuel bidding wars, but it’s a healthy reset for the market, which was once quite overheated.
Lenders Are Still Lending—But With Extra Scrutiny
The mortgage business has slowed, especially with transactions down nearly 50% compared to the 2021 peak. But Jason assures us that lenders are still very much open for business. What’s changed? Enhanced due diligence. “With fewer deals moving through the system, underwriters are asking more questions,” he explained. “It’s not a tighter lending environment, but it is a more thorough one.”
Alternative lenders, however, are tightening the screws. If you’re self-employed, have bruised credit, or don’t fit the traditional borrower profile, the underwriting process has become significantly more stringent.
Are People Defaulting? Not Really.
Mortgage delinquencies in Canada have ticked up slightly but remain very low by international standards at just 0.21%. For context, that’s a fraction of what we’re seeing in the U.S. or U.K.
And despite the looming fear of a so-called “renewal cliff,” Jason hasn’t had a single client forced to sell at renewal. Instead, people are refinancing, making lump-sum payments, or extending their amortizations to stay afloat.
Buyer Psychology: Less FOMO, More Focus
The psychology of Toronto homebuyers has shifted dramatically since 2021. Today’s buyers are deliberate, budget-conscious, and most notably not desperate. “People are more willing to walk away from a deal if it doesn’t feel right,” Jason said. “There’s less fear of missing out.” This cautious optimism is evident in the condo market. Believe it or not, condos are starting to make a comeback.
The Condo Comeback? (Yes, Really)
If you had told us six months ago that first-time buyers would be re-entering the condo market in droves, we might have raised an eyebrow. But it’s happening.
With prices down significantly from peak levels, some well below replacement cost value-driven buyers are jumping back in. And we’re seeing it firsthand: At Fox Marin, we’re actively working with a dozen first-time condo buyers across Toronto, which has been a noticeable uptick.
Interestingly, while low-rise homes are seeing some softness, condos are holding their own. We’ve had several recent listings outperform expectations, some with multiple offers.
Fall 2025 Predictions: Not a Rally, but Maybe a Reset
So, what happens next?
Jason predicts (at most) a modest rate cut by year-end, which could boost buyer confidence, and potentially a slight uptick in transaction volume off thirty-year lows. Ralph agrees, seeing more of the same: with continued sideways chop in low-rise, with a potential beginning of stabilization in the condo market.
Both agree that the key to recovery is stability and certainty. Not just in interest rates, but in trade, inflation, employment, and global politics. Once that arrives, and it will, eventually (hopefully sooner rather than later), we’ll likely see a healthier, more balanced market begin to take shape.
Final Thoughts: Cautious Optimism in a Changing Market
If there’s one clear theme emerging from the first half of 2025, it’s this: we’re in a market defined by caution—not chaos.
Yes, interest rates remain elevated. Yes, transaction volume is down significantly. And yes, uncertainty continues to loom over everything from inflation to global trade. But beneath the noise, something more constructive is happening.
Buyers are doing their homework and due diligence before putting pen to paper. Despite what the media is reporting, the vast majority of sellers aren’t panic-selling. Lenders are lending, but with cautious intention. And for the first time in years, people are making real estate decisions rooted in long-term thinking, not short-term hype, fomo, or to get rich quick.
The condo market is potentially showing very early signs of stabilization; however, there is still a long way to go. Buyers are re-entering the conversation, especially first-timer buyers who recognize value when they see it. And while we’re not expecting fireworks this fall, even modest rate cuts could give the market a gentle nudge in the right direction towards further stabilization.
No one can predict precisely how the next six months will play out. But what we do know is this: stability, not speculation, is what will ultimately restore confidence. And in today’s Toronto real estate market, confidence is currency.
So whether you’re looking to buy, sell, refinance, or simply stay informed, now is the time to be strategic, measured, and ready.
When the tide starts to turn, and eventually it will, those who’ve stayed engaged will be the ones best positioned to act when the time is right for them.
Thinking of making a move? Curious about what you can afford in today’s market—or what your home might be worth?
Let’s talk. Whether you’re buying, selling, or simply planning your next step, we’re here to help you navigate it with strategy, empathy, and insight.
Contact Fox Marin, Toronto’s downtown luxury real estate brokerage, today to learn more about the advantages of hiring a quality team!
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This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.
