Global Tariff Uncertainty - Not Good For the Canadian Housing Market

jessicakuan
Mar 1
2 min read

The Bank of Canada's efforts to make housing more affordable were offset by the increasing uncertainty surrounding a potential trade war with the United States. This uncertainty has led to a surge in new listings and a decline in sales activity, particularly in the last week of January 2025. While the housing market was poised for a strong rebound, the situation has only deteriorated due to the threat of a trade war. The Bank of Canada will eventually face a recession and respond by easing monetary policy, which will cause a significant drop in interest rates. As we have seen, the Canada 5-year government bond yield has already fallen sharply to 2.59%. Similar to what we saw in 2021, low mortgage rates will boost housing activity despite weak economic conditions. The Bank of Canada is expected to further cut interest rates to support the economy, as Canada's interest-rate sensitivity is higher than in the US.

The central bank is set to determine the benchmark overnight rate on March 12. Economists are divided on whether the bank will cut rates further or pause amid increasing uncertainties. Governor Tiff Macklem has expressed a desire to bolster economic growth and expects inflation to remain close to the 2% target, influenced by global energy prices. Currently, the odds favor another 25 basis points rate cut in March. Stay tuned for more updates on that!

Monthly Reminders

Speculation and Vacancy Tax– BC Residents

Residential property owners in the designated taxable areas declare every year for the speculation and vacancy tax, even if there is no change to your information.