Bank of Canada hiked. Your list price is target over 97.5%

The Bank hiked on Wednesday

The Bank of Canada raised its overnight rate by 25 basis points to 2.50% yesterday morning. It is the first move since the October 29, 2025 cut and it ends seven straight holds. If you are thinking about listing this fall or winter, you probably want to know whether to move your price. Short answer: less than the headlines suggest, but the arithmetic is worth doing.

What the Bank actually said

I read the press release on the Bank's site, not a summary of it. Inflation has run around 3% since April and is expected to reach about 3.5% by the end of the year, driven by oil. Excluding gasoline it was 2.2% in September. The Bank says there could be a need to increase the policy rate further, and that it will proceed carefully. It also expects "housing to remain relatively weak." The next decision is December 9.

So a second hike is on the table, and nobody can tell you today whether it happens.

What a hike does to your buyer, at the ceiling

Fixed mortgage rates follow bond yields, not the overnight rate. The 5 year Government of Canada benchmark was 3.57% on October 27, the last print the Bank had posted when I wrote this, so the market reaction to the decision is not in it yet. I covered that gap in Sunday's bond post, and the lender spread piece explains the 65 basis point spread I assume. The spread is my assumption, not a lender quote.

So here is the worst case, meaning the full 25 basis points lands on the rate a buyer must qualify at. A 3.57% bond plus my 65 basis point spread is a 4.22% contract rate, and the stress test adds 2 points for a qualifying rate of 6.22%. Add 25 basis points and it is 6.47%.

Payment per dollar of mortgage, 25 year amortization, semi-annual compounding: 0.0065294 at 6.22% and 0.0066801 at 6.47%. Divide the first by the second and you get 0.9774. A buyer with a fixed monthly budget can carry 2.3% less mortgage.

On OREB's September benchmark prices, that is:

• Single-family, $705,100: about $15,900 less (to $689,200)
• Townhouse, $546,500: about $12,300 less (to $534,200)

That is a ceiling for buyers who are right at their stress test limit. Buyers with room, buyers with big down payments and buyers who are not qualifying near the limit will not feel it. If bond yields drift down, the effect shrinks. I will not pretend it is a forecast.

The number sellers actually price from

OREB reports that Ottawa homes sold for an average of 97.5% of list in September, against 98.1% a year earlier. Sellers should work backwards from that. If you want to sell for $700,000:

List price = target sale price divided by the sale to list ratio.

At 97.5%, that is $700,000 divided by 0.975, or $717,949. At last September's 98.1% it was $713,558. The slippage in the ratio is worth $4,391 on your list price. Go back to June, when my July pricing post used 98.5%. The same $700,000 target listed at $710,660 then, so the slide since June is worth $7,289. Every one point of ratio on a $717,949 list is about $7,180.

Put the two together and the full pass through scenario above ($15,900 on a detached benchmark) is worth about 2.2 points of sale to list ratio ($15,900 divided by $7,180). That is the most you could blame on the hike. The ratio has already given up 1.0 point since June, so at the ceiling the hike would do more than twice what the last three months did.

Why I would not panic, and why I would not ignore it

The ratio is an average across every sale. It blends homes that sold in a week with homes that sat. OREB does not split it by days on market, so I cannot tell you what a correctly priced home gets. My July post warned that the ratio is earned by homes priced right on day one, and that still holds. Dividing by it builds in room to negotiate. It is not a licence to reach, so your target has to come from sold comparables first.

What I can tell you is the supply side. Sales to new listings was 34.5% in September, the lowest September in ten years, and months of inventory was 4.8. Single-family was at 4.4 months, townhouses 4.0 and apartments 7.3. Median days on market went from 22 to 27. Ottawa Centre was at 6.8 months. I wrote about what happened to the 1,600 listings that quit in September, and a hike does not make those buyers easier to find.

This is not a market where you list at your sold comp target and wait. Add the cushion the ratio says you will give up, and expect to negotiate. List below your target and the ratio takes you even further under it.

What I would do

Price from the last 30 days of sold comparables in your own segment, not from the citywide average. Then divide by the ratio that fits your segment and your area, and keep the arithmetic written down so you can explain it to yourself later.

Do not cut your price before you list because of the Bank. Decide what you will do at 14 and 21 days if the showings are thin, because the calendar does not rescue an overpriced listing.

When the offers come, read them against your plan, including conditions and the closing date.

How I will score this

OREB posts October numbers in the first week of November. If the sale to list ratio holds near 97%, the hike has not reached sellers yet. If it falls toward 96%, you will know before the December 9 decision does.

I sell houses. I do not arrange mortgages or give tax or legal advice, so what a rate change does to your own buyer pool or your own mortgage is a question for your lender or broker.

If you want a price built from your street's last 30 days of sales, call me at 613-262-6545 or email fil@613realtor.ca and I will run it with you.