The Trade War’s Impact on Canadian Housing, and the Next Rate Decision

This week’s top real estate stories.

By Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week. 

Another Campaign Week, Another Round of Housing Policy Proposals 

It’s week two of the federal election, meaning our prime ministerial hopefuls are back on the campaign trail with even more housing proposals. This week Liberal candidate and stand-in Prime Minister Mark Carney said he’d scrap the GST for first-time buyers of “new and substantially renovated” homes under $1 million, saving Canadians up to $50,000. The announcement follows Conservative Leader Pierre Poilievre’s proposal to eliminate GST on all new homes under $1.3 million, even among existing owners. NDP leader Jagmeet Singh, meanwhile, pledged to create a government-backed low-interest mortgage product for first-time buyers, saving them up to $9,500.

Toronto’s Condo Inventory Broke a Scary New Record  

Toronto’s snowiest February in recent memory was also its chilliest for new home sales. According to a study by the Building Industry and Land Development Association nearly 17,000 new and pre-construction condo units sat on the market that month. That marks a new high point (or low point?) for any February since the association began tracking new home sales in the ‘80s. According to the study, high prices, economic uncertainty and the prospect of lower interest rates kept many would-be buyers on the sidelines as inventory soared. Unsold new condos averaged over $1.02 million in price, down 2.4% from last year.

Cut it Out?  

It’s been almost a year since the Bank of Canada started slashing interest rates from 5% down to the current 2.75%, and now the rate-cutting party might be over. In a recent report, Scotiabank suggested that significant global economic uncertainty will pause interest rate cuts through the remainder of 2025 and into 2026. Even the Bank of Canada admits that it wouldn’t have made its most recent cut if not for dwindling business and consumer confidence. The rest of Canada’s big banks, however, believe interest rates could fall to 2.25% or even 2% this year.

Mortgage Fraud is Down — Unless You’re New to the Market  

Canadians are being more honest on their mortgage applications, except those just breaking into the market. According to a new study by Equifax, 37.6% fewer Canadians intentionally fudged the numbers on their mortgage applications in the last quarter of 2024 compared to Q3, while mortgage fraud overall dropped 0.2% to its lowest level since mid-2022. That includes everything from falsifying employment records to misrepresenting financial information. The study warns, however, that those without an existing mortgage are twice as likely to commit fraud than current mortgage holders. Alberta, Ontario and Quebec also reported above-average fraud rates compared to other provinces.

The Trade War Hits Homes

Tariffs are not only going to slow construction and make homes more expensive, but some Canadians will also have a harder time getting a mortgage thanks to American president Donald Trump. That’s because the Bank of Montreal recently announced it will be tightening borrowing requirements for self-employed workers in the steel and aluminum sector, and experts suspect other banks are doing the same, even if they’re not advertising it. Though the new policy only slightly raises the bar for self-employed borrowers in the tariff-affected industries, it’s an ominous sign of what could happen as the trade war expands.

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