Central bank makes crucial call amid inflation fears and gathering storm clouds over Canada's economy

By Fergal McAlinden

04 Jun. 2025

The Bank of Canada has opted against cutting interest rates in June, holding its benchmark rate steady amid concern over a potential inflation uptick in the months ahead.

The central bank said on Wednesday morning it was leaving the overnight rate, which leads variable mortgage rates in Canada, unchanged at 2.75% – the second time in a row it’s kept rates at their current level after also holding in April.

The decision had been viewed as a close call by observers, although expectations ticked in the direction of a hold after last week’s gross domestic product (GDP) reading showed the economy had performed better than expected in the first quarter.

Statistics Canada said on Friday (May 30) that the economy expanded by 2.2% in the opening three months of the year, higher than the 1.7% growth expected by economists, even though that was spurred in large part by US buyers rushing to bring in exports ahead of the Trump administration’s tariff wave.

Meanwhile, core inflation measures remained sticky in April despite a drop in the headline consumer price index (CPI) to 1.7%. Core prices, which exclude volatile food and energy costs, were up by 0.4% compared with March, an unwelcome sign for the central bank as it looks to avoid a repeat of the sharp 2022 uptick in inflation triggered in part by rate cuts.

While the Bank’s benchmark rate has fallen seven times since this time last year, it’s clearly moved into a wait-and-see mode as it weighs up how the trade war sparked by those Trump tariffs impacts the Canadian economy in the months ahead.

US trade policy has been marked by unpredictability and shifting language since Trump first pushed ahead with huge levies on Canadian imports in the first quarter, but analysts have highlighted the potentially huge threat they could pose to Canadian jobs this year.

This week, the Organisation for Economic Co-operation and Development (OECD) said it was expecting Canada’s growth forecast to slide to 1% this year and 1.1% in 2026, and economists still anticipate Bank of Canada cuts before the end of the year despite today’s hold.

The OECD expects the Bank’s policy rate to hit the 2.25% mark in 2025 through cuts totalling 50 basis points, while other observers including Bank of Montreal (BMO) economists believe it will fall to 2%.

The central bank will be keeping a keen eye on economic data including the inflation and growth outlooks between now and its next decision, scheduled for July 30 – when it’ll also release its Monetary Policy Report, signalling how it’s assessing on the economic landscape looking ahead.

Nearly 30% of Canadians planning to retire by 2026 will not fully own their homes, survey reveals

By Candyd Mendoza

27 May 2025

A growing number of Canadian retirees are heading into their retirement years still carrying mortgage debt.

Nearly three in 10 Canadians (29%) planning to retire in 2025 or 2026 expect to continue making mortgage payments on their primary residence even after they exit the workforce, according to a new survey by Royal LePage, conducted by Leger.

Just a decade ago, only half as many senior households had mortgage debt. Statistics Canada data shows that 14% of households with income earners aged 65 and over had a mortgage in 2016, up from 8% in 1999.

“The benefits of entering retirement as a homeowner with a paid-off mortgage are clear: more disposable income, insulation from interest rate changes, and even the emotional security that comes from knowing you'll always have a place to live,” said Phil Soper, president and CEO of Royal LePage. “In the era of rotary phones and station wagons, burning your mortgage was the economic finish line. Today's retiree reality is much more nuanced.”

While 45% of survey respondents said they already have their mortgage paid off and another 6% plan to do so before retiring, a large portion are preparing for retirement while still servicing debt. Among those planning to retire in the next two years, 46% said they intend to downsize their home within two years of leaving full-time employment, while 47% said they have no plans to do so.

“Home price appreciation over the past 25 years has been a double-edged sword for today's retirees,” Soper said. “On one hand, it has delivered unprecedented financial gains. On the other, this generation is far more likely to have carried mortgage balances that would have been unimaginable to their parents or grandparents.”

Additionally, retirees are more likely to have helped their children achieve homeownership, further influencing their own financial paths in retirement. Despite no longer drawing traditional employment income, many are managing their expenses with the help of part-time work, investment income, or a working spouse.

“While previous generations may have viewed mortgage-free retirement as the only option, today’s retirees tend to be more open-minded,” said Soper.

Canada’s average retirement age has risen to 65.3 in 2024, up from 64.3 in 2020, according to Statistics Canada. At the same time, many Canadians are entering the housing market later in life, another factor increasing the likelihood of carrying mortgage debt into retirement.

 A 2023 Royal LePage report showed that only 24% of first-time homebuyers were under 30, while 33% were aged 30–34, and 43% were aged 35 or older. In 2021, only 33% of first-time buyers were over 35, indicating a clear shift toward delayed entry into homeownership.

“While previous generations may have viewed mortgage-free retirement as the only option, today's retirees tend to be more open-minded,” said Soper. “Traditional employment income may have dried up, but many are still comfortably managing their expenses and servicing mortgage payments, with income from investments, part-time work, or a working spouse.”

Read next: Redefining retirement: How older Canadians are changing the game

Soper added that the overall experience of retirement has changed considerably over the past several decades.

“Compared to their grandparents, today’s retirees are enjoying about 50% more years after turning 65. They’re working longer, staying active, and in many ways, continuing the lives they led during their working years – just without the job,” he said. “With people buying their first homes later and working longer, it’s increasingly common for Canadians to carry a mortgage well into retirement, often by choice rather than necessity.”

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An inconvenient truth could be facing homeowners if affordability is to return to the housing market

By Fergal McAlinden

27 May 2025

The prime minister says the question of whether home prices need to fall in Canada doesn’t have a “yes or no” answer. But others believe the spike in Canadian home prices over the past decade – with some markets seeing the average cost of a home jump by more than 100% – means there’s little chance of restoring housing affordability without a meaningful price correction.

Mark Carney’s response to the question, which arose after new housing minister Gregor Robertson said he didn’t believe there was any need for home prices to tick lower, came with a caveat: a buildup in supply will naturally lead to lower prices, at least after a time.

“Once we increase the rate of homebuilding as a country, then that is going to make home prices much lower than they otherwise would be, but that’s a medium-term effect,” he said.

Still, mortgage agent Ryan Sims believes government officials’ careful language on the question is symptomatic of a central problem in the housing market: an unwillingness to ruffle the feathers of homeowners who’ve profited handsomely from skyrocketing price appreciation.

“When we look at the key demographic that brought Carney and the Liberals into power again, it was that typical baby boomer that bought their house at a much lower price, has built up a lot of equity and has really counted or banked on this home equity for their retirement,” Sims told Canadian Mortgage Professional.

“So that’s the demographic that got them elected, and they do have to tread carefully about saying, ‘Yes, house prices need to come down.’”

He suggested even the government’s reluctance to say frankly that prices must fall indicated a disconnect with the struggles of younger Canadians. “It just kind of proves how out of touch the government is. Go talk to a first-time homebuyer or anybody under the age of 35 and ask them where home prices need to go. They need to come down,” Sims said.

Carney government unveils ambitious housing platform

Addressing Canada’s housing crisis was a key plank of Carney’s election platform, and the former central banker – who’s widely credited with helping Canada avoid the worst of the global financial meltdown in 2007-08 and steering the British economy through the shock caused by the Brexit referendum – has unveiled an ambitious agenda on that front.

Among those plans are a vow to double the pace of home construction, hitting a clip of nearly half a million homes a year, and earmarking $10 billion in low-cost financing and capital for builders of affordable homes.

Carney also says he’ll cut red tape in the construction process, slashing municipal development charges and reintroduce a tax incentive that boosted rental housing construction during the 1970s.

Meanwhile, a high-profile proposal made during the election campaign centred around lower taxes for first-time buyers – namely, the elimination of the Goods and Services Tax (GST) for buyers purchasing their home at or under $1 million.

‘If we’re going to build dog crate condos, that’s not a solution’

While most in the mortgage industry agree that the market is in dire need of more inventory, Sims said the government could have its work cut out following through on those promises, particularly with the pace of homebuilding remaining sluggish throughout the Trudeau years.

The current condo crisis enveloping Toronto – which has seen demand plummet for tiny units in the centre of the city – also underscores the need to make sure the right type of homes are being built, he added.

“I think we have to be asking ourselves: What are we going to build? If we’re going to build dog crate condos, that’s not a solution,” he said. “I don’t know anybody that I’ve talked to that’s looking to buy their first home that goes, ‘What I would love is 450 square feet on the 20th floor of a crowded downtown city and if you could throw in some high property taxes and a really big condo fee every month, that would be the cherry on top for me.’ Nobody says that.

“People want to own their own home. They want a backyard for their kids to play in, whether we go with the white picket fence out front or not. But people don’t want what we’re currently bringing to market, and I think that’s what’s happening in the Toronto market.”

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Experts see stability returning, with growth hinging on Bank of Canada's June decision

By Candyd Mendoza

20 May 2025

With the summer market approaching, Canada’s housing sector is showing signs of cautious momentum after a sluggish spring.

Market watchers point to subdued activity, persistent affordability concerns, and an uncertain economic outlook driven by trade tensions and interest rate speculation as key factors shaping the landscape.

“Spring has really been off to quite a slow start right across the board,” says Anne-Elise Allegritti, research expert at Royal LePage. “That’s due to just a lack of confidence generally in the economy in the country due to trade relations with the United States. That’s really putting a huge damper on Canadians’ mentality.”

The Canada Real Estate Association’s latest data shows home sales dropped nearly 10% year over year in April. However, once adjusted for seasonal variation, sales levels were stable compared to March.

“Things haven’t really picked up, but they’re not necessarily getting worse. So this could be the turning point,” Allegritti noted. “I think what we’re seeing (based on April’s report) is that buyers don’t feel a real sense of urgency. I’ll be curious to see what May data looks like.”

Rate cut hopes may stir activity

Much now hinges on the Bank of Canada’s upcoming rate decision scheduled for June 4. While the central bank has signaled a cautious stance in recent months, some economists believe deteriorating economic indicators could prompt a cut.

“Mitigating the effects of the trade war, that’s still front of mind for the Bank of Canada. So that would make them more likely to cut,” said Clay Jarvis, a mortgage expert with NerdWallet. “Unemployment is rising right now. That might make them want to cut. There aren’t really too many positive signals in the economy that would have the Bank of Canada holding off.”

If a rate cut materializes, it could lead to a drop in mortgage rates, improving affordability for would-be buyers and possibly prompting an uptick in demand. However, any increase in activity would likely vary widely by region and housing type.

The country’s most expensive urban markets, notably Toronto and Vancouver, have seen notable cooling, while more affordable regions are gaining traction.

“Ten years ago, it was Toronto and Vancouver were hot and everyone else was not, and now it’s the opposite,” said Christopher Cathcart, referencing strong activity in the Prairies, Quebec, and the East Coast. “It’s places that are more affordable where you can get a house in the $300,000 and $400,000 range that are super hot.”

In the Greater Toronto Area, the slowdown is particularly pronounced for condominiums. A surplus in inventory — combined with a pullback from investors — has weighed heavily on prices.

Read next: From bidding wars to bargaining: Toronto home sellers slash prices

“There’s a lot of condos in the market, which is driving prices way down because investors aren’t purchasing,” said Stephen Moore, a sales representative at Century 21. “The buyer pool has dried up… and now the investors are not coming.

“The condo prices are already inflated. You just need to take the loss if you’re selling and move on. It’s a tricky market for condos.”

Buyers weigh opportunity against risk

While pockets of affordability exist, especially for detached homes in less saturated markets, economists advise buyers to tread carefully given economic volatility.

“You really have to look at your current conditions, your current financial conditions and it having some sort of semblance of job security,” said Jarvis. “If you have that, the market is actually pretty inviting right now.”

With a Bank of Canada rate decision looming and macroeconomic indicators shifting rapidly, the path forward for Canada’s housing market remains highly uncertain, but for some qualified buyers, opportunities may emerge in the months ahead.

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OTTAWA — Canada's new housing minister says he didn't have the tools he needed to address housing affordability issues when he was mayor of Vancouver — the country's most expensive housing market.

Craig Lord, The Canadian PressMay 14, 2025 5:43 PM

Gregor Robertson, minister of housing and infrastructure and minister responsible for Pacific Economic Development Canada, takes part in the cabinet swearing-in ceremony at Rideau Hall in Ottawa on Tuesday, May 13, 2025. THE CANADIAN PRESS/Christinne Muschi

OTTAWA — Canada's new housing minister says he didn't have the tools he needed to address housing affordability issues when he was mayor of Vancouver — the country's most expensive housing market.

Gregor Robertson faced questions about his record on housing affordability from reporters ahead of his first cabinet meeting on Wednesday, less than 24 hours after he was sworn in as Prime Minister Mark Carney's housing minister.

"I'm here to leverage my history as a mayor. I know what works on the ground," Robertson said.

Data from Greater Vancouver Realtors shows that the price of a benchmark home in the region more than doubled during Robertson's time as mayor from December 2008 to November 2018.

Robertson argued that many cities across Canada saw similar surges during that period.

Over the same period, the national benchmark home price rose by 78 per cent, data from the Canadian Real Estate Association shows.

Robertson also said he "wasn't getting the help" he needed from higher levels of government when he was mayor. He said the Liberals' housing accelerator fund — cash set aside for cities that lower barriers to home construction — is one program he thinks will help to address affordability concerns.

The Canadian Press asked Robertson if he felt home prices need to go down to restore affordability.

"No, I think that we need to deliver more supply, make sure the market is stable," he said.

When asked the same question Tuesday, Carney said that while there are things Ottawa can do now to help with affordability — such as cutting the GST on new builds for first-time buyers — the long-term solution is to boost supply.

He said that Robertson's experience will help the federal government understand better how to get municipalities to cut costs and regulation impeding construction.

Conservative Leader Pierre Poilievre on Tuesday attacked Carney's decision to appoint Robertson to the housing file.

"If this is the new blood that Mr. Carney is bringing into the cabinet, then sadly for Canadians, nothing is going to change," he said.

Robertson said that there's a "huge shortage" of affordable housing in Canada due to a lack of government efforts to bring those units to market.

During the campaign, the Liberals pledged to create a new agency to develop affordable housing and promised funding to streamline homebuilding through technologies such as prefabricated homes.

The Liberals also pledged to get cities to cut development charges in half and to restore immigration rates to "sustainable" levels.

While Robertson said the federal government's goal of doubling the pace of home construction is "very ambitious" and will take years to "scale up," he struck a note of optimism.

"We've got a lot of work to do on this and it doesn't happen overnight. Housing is a slow-moving creature and we've got to do everything we can to speed it up," he said.

B.C. Premier David Eby was asked whether he agrees with Robertson's comments at an availability in Victoria on Wednesday.

Eby did not speak to home prices specifically but said the province's focus is on lowering the cost of housing, getting more rental housing built and driving down rents, in part by reducing the cost of land for development.

This report by The Canadian Press was first published May 14, 2025.

Craig Lord, The Canadian Press

Prime minister pledges to protect Canada and tackle the nation's housing shortage

By Candyd Mendoza

29 Apr. 2025

In one of Canada’s most consequential elections in decades, Mark Carney secured a historic victory.

However, it remains uncertain whether his Liberal Party will reach the 172-seat threshold needed for an outright majority, with full results expected by early Tuesday morning.

The election was widely seen as a referendum on leadership strength against external threats, particularly President Donald Trump, who inflamed tensions by threatening to annex Canada and imposing heavy tariffs.

"As I've been warning for months, America wants our land, our resources, our water, our country," Carney told supporters Monday night. "These are not idle threats. President Trump is trying to break us so America can own us. That will never... ever happen."

Carney’s firm stance quickly drew praise on the international stage.

Ursula von der Leyen, president of the European Commission, wrote on X: "I look forward to working closely together, both bilaterally and within the G7. We'll defend our shared democratic values, promote multilateralism, and champion free and fair trade."

Australian Prime Minister Anthony Albanese echoed the sentiment, posting: "In a time of global uncertainty, I look forward to continuing to work with you to build on the enduring friendship between our nations, in the shared interests of all our citizens."

Carney’s path to leadership

Carney, 60, brought extensive financial experience to his political debut. A former investment banker, he previously served as the head of the Bank of England during Brexit and the governor of the Bank of Canada during the 2008 financial crisis.

Despite never holding elected office before, Carney was named leader of the Liberal Party in March. His background in finance and calm demeanor helped persuade voters he was the candidate best equipped to counter Trump’s unpredictable policies.

Carney defeated Pierre Poilievre, the 45-year-old leader of the Conservative Party. Poilievre had led the polls for more than a year, at one point with a 27-point advantage over the Liberals. His momentum shifted after former Prime Minister Justin Trudeau resigned in January, giving the Liberals a much-needed boost.

The turning point came as Trump intensified his attacks on Canada’s economy and sovereignty, culminating in a provocative social media post on election day suggesting Canada could become the 51st US state.

Poilievre’s campaign, characterized by Trump-style rhetoric, including a "Canada First" slogan, promises of tighter borders, smaller government, and opposition to "wokeness," resonated early on. However, his perceived alignment with Trump ultimately damaged his standing with voters.

This loss marks the Conservative Party’s third consecutive defeat in federal elections, leading analysts to predict internal debates over its future direction.

Carney’s promises

In addition to foreign policy concerns, housing emerged as a pivotal issue throughout the campaign. Experts believe no single party has a full solution, but acknowledge progress is being made.

"I don’t think any of the parties are going to have enough to solve the crisis, but they are moving in the right direction," said Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute.

The Liberal Party’s housing platform includes a plan to double the pace of homebuilding, targeting 500,000 units per year over the next decade. A new crown corporation, Build Canada Homes, would lead this effort by directly engaging the federal government in home construction.

Read next: Housing policies a key issue for Canadian voters ahead of election

"Well, the federal government’s been doing this a little bit since 2017. Carney is suggesting he take it further and actually act as a developer and create a new crown corporation," Moffatt explained.

However, Moffatt cautioned that while the plan is ambitious, scepticism is warranted. "It’s an ambitious plan, but I think a little bit of skepticism is warranted because it is so ambitious, creating a new crown corporation out of scratch to be a developer, it’s going to be a challenge for the government to pull off," he said.

He also highlighted structural obstacles: the federal government has no direct control over municipalities, limiting its ability to mandate lower development charges, which Moffatt said all parties agree are “far too high.”

"What they can do is, create a bunch of incentive programs and try to incentivize municipalities to do the right thing, but they can’t force them to do it, and there’s always challenges around coming up with agreements and actually making sure that those municipalities live up to their word," he noted.

Central bank announces pause as trade tensions rumble on

By Fergal McAlinden
16 Apr. 2025

The Bank of Canada has hit pause on its rate-cutting path, keeping its benchmark interest rate unchanged in April as it weighs up the likely impact to the Canadian economy of US president Donald Trump’s global trade war.  

The central bank said on Wednesday morning it was leaving its overnight rate at the current level of 2.75%, opting against bringing borrowing costs lower again amid lingering concern about the possible effect of Trump’s tariffs on Canadian inflation.  

Money market odds of a rate cut jumped yesterday after the consumer price index (CPI) unexpectedly dipped to 2.3% despite economists’ projections that it would remain unchanged from February at 2.6%.  

But analysts still saw a roughly 50% chance that the Bank would leave rates untouched, with its prior decision (a 25-basis-point cut in March) seeing central bank officials emphasize the need to balance the potential negative economic impact of Trump’s policies – which include steep levies against Canadian steel and aluminum – with upside risks to inflation.  

The move marks the first time in nearly a year that the Bank has left rates unchanged, having introduced seven consecutive cuts since last April and moved that benchmark rate from a two-decade high of 5%.  

Leading banks are likely to leave their own prime rates unchanged – and the Bank’s path ahead on rates for the remainder of 2025 is also unclear. Trump’s tariff war could see prices rise sharply while a potential recession is also looming into view, with the central bank’s first-quarter business outlook survey indicating that around 32% of surveyed firms now expect the economy to see a downturn, up sharply from 15% in Q4.  

Top lenders including TD, Royal Bank of Canada (RBC) and Canadian Imperial Bank of Commerce (CIBC) expect the benchmark rate to land at 2.25% by the end of the year, while Bank of Montreal (BMO) and National Bank see that rate slipping to 2% before January.  

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Housing supply crisis shows little sign of improving

By Fergal McAlinden
15 Apr. 2025

Housing starts surprisingly fell by 3.3% last month in Canada compared with February as a sluggish pace of national homebuilding this year continued.

Data from national housing agency Canada Mortgage and Housing Corporation (CMHC) showed on Tuesday that the seasonally adjusted annualized rate (SAAR) of housing starts slid to 214,155 units last month, down from a revised 221,405 units in February.

That marked an unexpected dip, well below economists’ projections of 242,500 starts for the month, and the second monthly decline after starts also dived in February.

In centres with a population of 10,000 or greater, actual housing starts came in at 14,924 units compared with 17,052 the same time last year, while the monthly SAAR for those centres fell by 2.8% (from 209,093 units to 203,285).

The pace of housing starts in Montreal surged in March, jumping by 138% year over year thanks mainly to an increase in multi-unit starts. Still, that trend was offset by significant declines in Vancouver and Toronto, which saw starts fall by 59% and 65% respectively.

Multi-unit starts in Vancouver were well down, while multi-unit and single-detached starts fell in Toronto.

The pace of home construction shows little sign of rising to the levels needed to ease Canada’s housing crisis, with national supply levels still millions short of what CMHC says is required to make housing affordable for all Canadians by 2030.

Actual housing starts ticked slightly upwards in 2024 compared with the previous year, the housing agency said in January, increasing by 2% in centres with a population of 10,000 or more.

Overall unit starts came in at 227,697 for the year compared with 223,513 in 2023, with the total for all areas in Canada also increasing by 2% year over year to 245,120 units.

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