The Bank of Canada today reduced its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is continuing its policy of balance sheet normalization.

https://www.bankofcanada.ca/2024/06/fad-press-release-2024-06-05/

Canadian Housing Market Cools as #Trade Tensions Loom


The Canadian housing market experienced a notable slowdown in March, with both home sales and prices declining, according to the Canadian Real Estate Association (CREA). This shift in momentum is accompanied by a less optimistic outlook for the remainder of the year, largely attributed to escalating global trade tensions initiated by the United States. CREA reported a significant 4.8% drop in home sales from February to March. This decline marks the fourth consecutive monthly decrease, resulting in a cumulative 20% fall from the recent peak observed in November. On an unadjusted annual basis, March sales were down 9.3%, marking the lowest level for that month since 2009.

Price trends also reflected this cooling market. CREA's Home Price Index registered a 1% month-over-month decrease and a 2.1% year-over-year decline. The national average selling price saw a more substantial annual drop of 3.7%.

According to CREA's senior economist, the initial downturn in sales was primarily linked to uncertainty surrounding tariffs. However, the association now anticipates that the Canadian housing sector will increasingly be affected by the actual economic repercussions of these trade disputes. This has led to a significant downward revision of CREA's 2025 forecast. The association now projects 482,673 residential property sales for the year, essentially unchanged from 2024. This is a stark contrast to their January forecast, which had anticipated an 8.6% increase in sales.

Adding to the concerning picture, data from Canada's national housing agency revealed a 3.3% month-over-month decrease in housing starts in March, reaching an annualized rate of 214,155 units. This figure fell short of economists' expectations of 242,500 units.

The confluence of declining sales and prices, coupled with a weakened forecast and lower housing starts, paints a picture of a Canadian housing market facing significant headwinds. The primary concern now revolves around the broader economic impact of ongoing trade tensions and their potential to further dampen market activity throughout the remainder of 2025.

Navigating Market Uncertainty: Staying Calm Amidst Housing Shifts

Recent data reveals a cooling trend in the Canadian housing market, with sales and prices experiencing declines. While these shifts can understandably cause concern, it's crucial to maintain a long-term perspective and avoid impulsive reactions. regarding market fluctuations and mortgage choices, reacting with panic to market drops is generally not advisable; a measured and informed approach is key.

Looking ahead, even if the current trade-related headwinds facing the economy were to ease, a swift return to previous market conditions is not necessarily anticipated. A period of adjustment is likely before consumer confidence fully recovers and translates into increased purchasing activity. This period could potentially span a couple of months as individuals and the market digest the resolution and regain a sense of stability.

The suddenness and magnitude of recent economic announcements, particularly concerning tariffs, have understandably created a degree of uncertainty and taken many by surprise. Consequently, even after the resolution of such events, a period of time is needed for individuals to process the changes and rebuild the confidence required for significant financial decisions, such as purchasing a home. Planning and regaining comfort in the market will take time.

Therefore, while the current market adjustments warrant attention, a calm and informed approach, coupled with an understanding of the potential timeline for recovery, is the most prudent way to navigate the evolving #Canadian #housing landscape.

A Game-Changer for First-Time Homebuyers: Understanding Canada's New GST Rebate (Effective May 27th, 2025)
The Canadian housing market has been a formidable challenge for aspiring homeowners, particularly for those looking to purchase their first property. With rising prices and the persistent issue of affordability, the dream of homeownership has felt increasingly out of reach for many young Canadians. Recognizing this pressing concern, the federal government recently announced significant changes to the Goods and Services Tax (GST) rebate for first-time homebuyers, taking effect on May 27th, 2025. This new measure aims to reduce the upfront costs of purchasing a newly constructed home and, in turn, stimulate the construction of new housing units across the country.
This isn't merely an incremental adjustment; it represents a substantial shift from the previous GST/HST New Housing Rebate and introduces a targeted First-Time Home Buyers' GST Rebate (FTHB GST Rebate) designed to put thousands of dollars back into the pockets of eligible buyers. Let's delve into the key differences between the old and new rebate structures, the eligibility criteria, and what this means for Canada's housing landscape.
The Landscape Before May 27th, 2025: The Existing GST/HST New Housing Rebate
Prior to the recent changes, the primary mechanism for receiving a rebate on the GST or the federal portion of the Harmonized Sales Tax (HST) on new homes was the GST/HST New Housing Rebate. This rebate was available to individuals who purchased a new or substantially renovated home, built a home, or purchased a share in a co-operative housing corporation for use as their or a relation's primary place of residence.
While beneficial, the previous rebate had certain limitations that often left many first-time buyers in major urban centres without significant relief. Here's how it generally worked:
* Rebate Calculation: The rebate amount was 36% of the GST (or federal portion of HST) paid.
* Price Thresholds:
* For homes priced at $350,000 or less, a full 36% rebate was possible, up to a maximum of $6,300.
* For homes between $350,001 and $449,999, the rebate would gradually decrease.
* For homes priced at $450,000 or more, there was no federal GST/HST rebate available.
In provinces with HST, there were often provincial new housing rebates that could be claimed in addition to the federal rebate. For example, Ontario offered a rebate of up to $24,000 on the provincial portion of the HST, regardless of the home's value (as long as other conditions were met). However, the federal portion's strict $450,000 cut-off meant that in many high-cost markets, the federal rebate was simply not accessible for the average new home. This significantly limited the overall savings for first-time buyers attempting to enter these expensive markets.
Furthermore, the existing rebate wasn't specifically targeted at first-time buyers. While many first-time buyers might have qualified, the program's design didn't prioritize them above other eligible individuals purchasing new homes.
The New Era: First-Time Home Buyers' GST Rebate (FTHB GST Rebate) – Effective May 27th, 2025
The government's recent announcement introduces a tailored and far more impactful First-Time Home Buyers' GST Rebate (FTHB GST Rebate). This new measure is designed to directly address the affordability challenges faced by those entering the housing market for the first time. The key changes are focused on significantly increasing the price thresholds for eligibility and providing a full GST exemption for homes below a certain value.
Here's a breakdown of the new FTHB GST Rebate:
* Full GST Elimination (100% Rebate): For new homes priced up to $1 million, eligible first-time homebuyers can receive a 100% rebate on the GST (or the federal portion of HST). This means the GST is effectively eliminated for these purchases, offering a substantial saving of up to $50,000 (based on a 5% GST rate on a $1 million home).

* Phased Rebate for Higher-Value Homes: For new homes valued between $1 million and $1.5 million, the rebate will be linearly phased out. This means the higher the home's price within this range, the smaller the rebate. For example, a $1.25 million home would qualify for a 50% GST rebate, offering potential savings of up to $25,000.
* No Rebate for Very High-Value Homes: New homes priced at or above $1.5 million will not be eligible for this new FTHB GST Rebate.
* Targeted Eligibility: This new rebate is exclusively for first-time home buyers. While it complements the existing GST/HST New Housing Rebate (which may still apply for other eligible new home purchasers), it introduces specific conditions to ensure it benefits those buying their first home.
Key Eligibility Criteria for the New FTHB GST Rebate:
To qualify for the new FTHB GST Rebate, at least one of the purchasers must meet the following conditions:
* First-Time Home Buyer: The individual must be a first-time home buyer, meaning they have not owned a home, nor lived in a home owned by a spouse or common-law partner, in the current calendar year or in the four preceding calendar years.
* Primary Residence: The new home must be acquired for use as the individual's primary place of residence, and they must be the first individual to occupy the home as a place of residence.
* Canadian Citizen or Permanent Resident: The eligible individual must be at least 18 years old and a Canadian citizen or permanent resident.
* One-Time Benefit: An individual can only claim this FTHB GST Rebate once in their lifetime. Furthermore, an individual cannot claim the rebate if their spouse or common-law partner has previously claimed it.
* Agreement and Construction Dates: The agreement of purchase and sale for the new home must be entered into with the builder on or after May 27th, 2025, and before 2031. Construction of the home must also begin before 2031 and be substantially completed by 2036.
* Eligible Home Types: The rebate applies to new homes purchased from a builder, owner-built homes (where the individual builds or hires someone to build on their own land), and purchases of shares in cooperative housing corporations.
Comparing the Impact: Old vs. New
The contrast between the old and new rebate structures is significant, especially for first-time homebuyers in urban centres:
* Accessibility: The most profound change is the dramatic increase in the home value threshold. The previous $450,000 federal limit excluded a vast majority of new homes in populous areas. The new $1 million full rebate threshold, and the $1.5 million partial rebate threshold, makes the FTHB GST Rebate genuinely accessible to a much broader segment of first-time buyers across Canada.
* Savings Potential: The potential savings are vastly higher. Under the old system, the maximum federal rebate was $6,300. The new system allows for up to $50,000 in GST savings, representing a massive reduction in upfront costs for qualified buyers.
* Targeting: The explicit "first-time home buyer" condition in the new rebate ensures that the benefits are directed precisely to those who need the most help breaking into the market. The old rebate was broader in its application.
* Market Stimulation: By making new homes more affordable for first-time buyers, the government aims to encourage more new construction. This could help address the persistent housing supply shortage that has contributed to rising prices. Builders now have a greater incentive to build homes within these new eligible price ranges.
What This Means for You
If you are a first-time home buyer in Canada contemplating the purchase of a new construction home, these changes are incredibly positive. They represent a tangible reduction in the financial hurdle of entering the housing market.

* Increased Buying Power: The potential savings of up to $50,000 directly translate into increased buying power, potentially allowing you to consider a wider range of homes or reducing the amount you need to finance.
* Focus on New Builds: This rebate strongly incentivizes the purchase of new homes, which could be a strategic advantage for those looking for modern features, energy efficiency, and typically less immediate maintenance compared to older resale properties.
* Planning is Key: Be mindful of the effective dates. The purchase agreement must be signed on or after May 27th, 2025, to qualify for the new FTHB GST Rebate. If you're in the market for a new home, ensure your builder is aware of these changes and can guide you through the application process, which is often handled directly through the builder at the time of purchase.
This new First-Time Home Buyers' GST Rebate is a significant step by the Canadian government to alleviate housing affordability pressures. It's a clear signal of support for those striving to achieve homeownership, and it will undoubtedly play a crucial role in shaping the new construction segment of the Canadian housing market for years to come. If you're considering a new home purchase, now is the time to understand how this exciting new rebate can benefit your journey to homeownership.

​For months, the market has been pricing in aggressive rate cuts. However, new geopolitical tensions (specifically the conflict involving Iran) have sent oil prices surging back toward the $100 mark.

​The Energy Spike: Higher gas and shipping prices bleed into everything—groceries, construction materials, and services.
​
Unlike the U.S. Fed, the Bank of Canada is laser-focused on inflation. If headline CPI spikes toward 3% again, the "pivot" we’ve all been waiting for will be delayed.
​
If they cut too early to save a stalling economy, they risk a 1970s-style "stagflation" scenario.

​1. The "Soggy" Spring Market: We are seeing a K-shaped recovery. While high-end buyers with equity are still moving, the middle class is feeling the squeeze of higher cost-of-living and debt loads. Expect inventory to sit longer as "wait-and-see" remains the dominant strategy.

​2. Mortgage Renewals are the Real Test: The "wall" of 2020-2022 renewals is hitting hard. Those who locked in at 2% are now facing 5-6% realities. This is cooling the secondary market and putting pressure on over-leveraged investors.

​3. Fixed vs. Variable Strategy: With bond yields rising due to global instability, fixed rates are already creeping up. If you’re looking to buy or renew, the window for "lower" fixed rates might be closing. The "variable" gamble—waiting for BoC cuts—is looking riskier by the day.
​
​We are in a "Higher for Longer" environment 2.0. The volatility in the Middle East has effectively reset the clock on the Bank of Canada’s easing cycle.

​ Don’t wait for a 2% world that isn’t coming back this year. Focus on the product and long-term value, not just the rate.

Pricing strategy is more critical now than it was in 2024. You cannot price based on "future" rate cuts that are now being pushed to late 2026 or 2027.
​What’s your move? Are you locking in a fixed rate now, or betting that the BoC will be forced to cut to prevent a recession? Let’s discuss in the comments. 👇 read more

https://financialpost.com/news/bank-of-canada-risk-blowing-inflation

​#TorontoRealEstate #BankOfCanada #Inflation #MortgageRates #TorontoHousing #Economy2026 #RealEstateInvesting

The Bank of Canada (BoC) announced that it is keeping the overnight rate at 2.25%, the Bank Rate at 2.5% and the deposit rate at 2.20%. The bank cited the Iran war as a major source of uncertainty, noting that it has pushed energy prices further and "heightened the risks to the global economy."

CIBC economists warn that Canada's housing market is in "worse shape than believed," describing the current economics of homebuilding as "simply broken". In a report released on February 18, 2026, deputy chief economist Benjamin Tal and Katherine Judge argue that the market has reached a dysfunctional state where prices remain too high for buyers to afford, yet are not high enough to make new construction profitable for developers.

Overstated Housing Starts: CIBC warns that official figures from the Canada Mortgage and Housing Corp. (CMHC, INC.) are misleading. While 2025 data showed a 5.6% rise in housing starts, these figures often reflect projects where construction was decided years ago. Real-time activity in hubs like Toronto and Vancouver may be 50% and 30% lower, respectively, than headline statistics suggest.

The "negative wealth effect" of falling home values is expected to curb household spending as owners can no longer easily tap into home equity. Tal suggests we are in the early stages of a correction that will weigh heavily on Canada's GDP throughout 2026.

The high-rise condo market is particularly hard-hit. In Ontario, condo prices have dropped roughly 22% from their peak, with CIBC forecasting a further 10% to 15% decline before the market clears.

High financing costs, labor shortages, and municipal development charges have made many projects unfeasible. Tal calls for immediate government action to "slash" development charges rather than conducting more research.


CIBC and CMHC projections indicate a "transition year" for the housing market, marked by slow growth and shifting household dynamics. Canada's economy is expected to grow by only 0.7% in 2026 due to trade tensions and high unemployment. Ontario is the only region expected to see continued price declines through 2026, while other regions like the Prairies may remain above historical averages.
"Doubling Up" Trend: Affordability issues are leading to an increase in multi-family households. CIBC estimates "doubling up" rates could reach 30% in Toronto and Vancouver, masking the true depth of the housing shortage.

TD Economics Lowers Expectations for Canadian Housing in 2026

The spring housing market is seeing a chill as TD Economics officially shifted its forecast, now projecting a decline in both national home sales and prices for 2026. This is a significant pivot from the growth anticipated just a few months ago.
While the national average price is expected to edge down slightly by 0.3%, the real story lies in the regional divide. High-cost hubs like Ontario and BC are facing the sharpest corrections, while the Prairies and Atlantic Canada continue to show resilience due to better affordability and tighter supply.

Province Projected Price Change (2026)
Ontario -4.0%
British Columbia -1.2%
Quebec +0.1%
Nova Scotia +0.8%
Manitoba +1.5%
Saskatchewan +1.9%
New Brunswick +2.1%
Alberta +2.4%
PEI +2.6%
Newfoundland & Labrador +3.4%


The downgrade follows a lackluster start to the year. With near-zero population growth recently recorded and persistent cost-of-living pressures, many buyers in expensive markets are "waiting for the bottom" before jumping back in.

TD expects this to be a temporary dip, with a projected 9.6% surge in sales activity for 2027 as the economy stabilizes.

Is your local market feeling the cooldown, or are you seeing steady demand?

The 2026 Mortgage Cliff: What TD’s Latest Housing Forecast Means for Your Renewal 🏠📉
With TD Economics officially revising its 2026 outlook to project falling home prices—specifically a 4.0% drop in Ontario and a 1.2% dip in British Columbia—homeowners approaching mortgage renewals are facing a new set of variables.
If you bought at the peak of the market or are coming off a low-rate fixed term from five years ago, the "wealth effect" is shifting. Here is how the projected price correction impacts your renewal strategy:
1. The Equity Squeeze
Falling prices mean lower home appraisals. If your property value drops while your loan balance remains high, your Loan-to-Value (LTV) ratio increases.
The Risk: If your equity dips below 20%, you may lose the ability to "switch" lenders to hunt for better rates, as you could be treated as a high-ratio borrower requiring mortgage insurance.
The Strategy: If you have extra cash, consider a lump-sum prepayment before renewal to maintain a healthy equity cushion.
2. The "Wait and See" Variable Rate
TD notes that many buyers are "waiting for the bottom." For those renewing, this creates a dilemma: lock in a fixed rate now or ride a variable rate?
The Trend: If prices continue to slide through 2026, the Bank of Canada may face more pressure to adjust policy to stimulate the economy.
The Strategy: A shorter-term fixed rate (2 or 3 years) might be the "sweet spot," providing stability while allowing you to renew again when TD predicts the market will surge in 2027.
3. Rental Property Challenges
With TD citing near-zero population growth as a factor in cooling demand, investor-owners in Ontario and BC may see softer rental growth.
The Risk: Higher renewal rates combined with stagnant or falling property values can lead to negative cash flow.
The Strategy: Review your portfolio’s debt-service ratio now. It may be time to prioritize debt reduction over acquisition until the projected 2027 rebound.
The Bottom Line
The 2026 market isn't about rapid gains; it's about defensive positioning. While TD predicts a 9.6% jump in sales for 2027, the next 12 months require a sharp eye on your home’s valuation.

Canadian fixed #mortgage rates have risen significantly as of April 2026 due to the escalating conflict in the Middle East. 

Three- and five-year fixed rates have jumped by approximately 0.25% to 0.50% in the weeks following the start of the conflict.

As of early April 2026, average five-year fixed rates have moved from approximately 4% to 4.95%.
The lowest advertised five-year fixed insured rates now sit around 3.89% to 4.09%, up from roughly 3.79% in February.
:
The conflict led to the closure of the Strait of Hormuz, a critical oil transit chokepoint, driving global oil prices to around $100 per barrel.

Higher energy costs act as a major inflationary threat, which investors fear will force central banks to keep interest rates higher for longer. Fixed mortgage rates are priced based on Government of Canada bond yields, not directly by the Bank of Canada.

The five-year bond yield surged above 3.3% recently—its highest point since late 2024—as investors sold off bonds in anticipation of higher inflation.

Despite rising fixed rates, the (Bank of Canada held its key overnight rate at 2.25% on March 18, 2026.

This hold has kept variable mortgage rates relatively stable (averaging 3.35% to 4.2%), creating a rare environment where variable rates are lower than fixed rates.

Approximately 1.4 million mortgages are set for renewal by the end of 2026. Homeowners renewing this year may face "sticker shock" as they move from lower pandemic-era rates to these new, conflict-driven highs. 

https://www.cbc.ca/news/canada/iran-war-mortgage-rates-canada-9.7152182

The Bank of Canada April 29th announcement brought a familiar sense of "wait and see," but with a sharp new warning: the era of rate stability may be fragile. While the Bank held the policy rate at 2.25%, Governor Tiff Macklem didn’t mince words. The message was clear: if global oil prices continue to surge, the Bank is prepared to pivot from holding steady to a path of consecutive rate hikes.

Canada finds itself in a unique position. As a net exporter of energy, higher oil prices are a boon for our national income and trade balance. However, for the average Canadian consumer and business owner, the reality is far more punishing. Higher prices at the pump don't just affect commuters; they leak into the supply chain, raising the cost of transporting everything from groceries to construction materials. If these costs become "entrenched"—meaning they lead to a generalized rise in prices across the board—the Bank’s hand will be forced.

2.25% (4th consecutive hold). CPI hit 2.4% in March, with a projected peak of 3% in April. The Bank is banking on oil moderating to US$75/barrel by mid-2027. If we stay significantly above that, the "baseline" evaporates.

What makes this moment particularly complex is the "downside risk." While oil threatens to push rates up, the looming CUSMA review and potential U.S. trade restrictions act as a counterweight. If trade barriers slow the economy too much, the Bank might actually need to cut rates to prevent a recession.
We are currently watching a tug-of-war between energy-driven inflation and trade-driven stagnation.

For those of us in the business community, this signals a need for agility in capital planning.

The window of "predictable" rates might be closing. If your projects rely on floating rates, now is the time to stress-test your numbers against a 50–75 basis point increase.

If you haven’t already, look at how sensitive your margins are to fuel surcharges.
Consumer Sentiment: Watch for a dip in discretionary spending as gas prices eat into household budgets this summer.

The Bank of Canada is no longer just watching domestic data, they are watching global headlines. All eyes are now on the June 10th announcement.

The GTA real estate market is officially in a holding pattern. According to the latest TRREB stats, average prices dipped 5.1% year-over-year to $1,006,409, while sales fell 9%. Active buyers are finding themselves in a rare position of strength with more choice and room to negotiate.