GTA Homebuyers Navigate Higher Borrowing Costs Amid Falling Prices

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Despite increased borrowing costs in the Greater Toronto Area, homebuyers are finding affordability due to lower selling prices. The Toronto Regional Real Estate Board reports a decline in home sales and listings, with ongoing uncertainty in the market.

In the Greater Toronto Area (GTA), borrowing costs have risen compared to last year, yet the monthly mortgage payments for an average-priced home have only seen a slight increase, remaining significantly lower than what buyers were paying in 2023 and 2024. This information comes from the latest report by the Toronto Regional Real Estate Board (TRREB). TRREB's Chief Information Officer, Jason Mercer, noted that GTA homebuyers have retained substantial negotiating power over prices over the past year. Although higher inflation has led to increased borrowing costs, the effect on monthly mortgage payments has been mitigated by a decrease in selling prices, which has helped maintain a level of affordability in the market.
The data shows a continued decline in home prices from the previous year. In October, the MLS® Home Price Index (MLS® HPI) Composite benchmark recorded a 4.3% drop compared to a year earlier, with the average selling price falling to $1,024,108—a 2.7% decrease. Despite these lower prices, many prospective buyers are still hesitating to enter the market. According to TRREB, there’s a prevailing uncertainty regarding future trends in inflation, borrowing costs, and the overall economy.
In October, the TRREB's MLS® System reported a total of 5,603 home sales, which is 7.9% fewer than the number of sales recorded in October 2025. Additionally, new listings fell to 14,173, marking an 11.9% year-over-year decline. However, when looking at the month-to-month performance, there was a different narrative; seasonally adjusted figures indicated increases in sales, new listings, the HPI Composite, and the average selling price compared to September.
TRREB President Daniel Steinfeld expressed optimism that a clearer economic outlook could rekindle buyer interest in the upcoming year. He mentioned that if a trade agreement between Canada and the U.S. is established, it could provide GTA residents with a better understanding of the economic landscape. Furthermore, a resolution to the ongoing conflict in the Middle East could alleviate concerns regarding inflation and economic instability, thereby enhancing consumer confidence and spurring renewed interest in homeownership as the region moves into 2027.
Taking a broader perspective, TRREB CEO John DiMichele acknowledged the volatility currently affecting the ownership housing market but emphasized the ongoing growth of the permanent population in the GTA. He highlighted that policy measures such as HST rebates and reductions in development charges are expected to facilitate a more diverse range of ownership and rental options, which will be essential for accommodating new families in an affordable manner in the medium term.

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