The Bank of Canada holds rates steady in the face of tariff uncertainty

General Angela Calla 16 Apr

Bank of Canada Holds Rates Steady In The Face Of Tariff Uncertainty–More Rate Cuts Coming
The Bank of Canada held its benchmark interest rate unchanged at 2.75% at today’s meeting, as expected by half of the market, to mark the first hold following 225 basis points of cuts in seven consecutive decisions. The governing council noted that the unpredictability of the magnitude and duration of tariffs posed downside risks to growth and lifted inflation expectations, warranting caution regarding the continuation of monetary easing.

The higher uncertainty stemmed from the United States’ lack of a clear tariff path, prompting the BoC Governing Council to present two economic scenarios in its latest Monetary Policy Report. Should the US limit the scope of its tariffs on Canada, the BoC expects growth to temporarily weaken and inflation to hold near the 2% target. Should the US proceed with an all-out trade war with Canada and China, the BoC has pencilled in a recession this year, and inflation rising temporarily above 3% next year.

Of course, as the Bank stated in its press release, “Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented.”

The statement says, “Serial tariff announcements, postponements, and continued threats of escalation have roiled financial markets. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada’s exchange rate has recently appreciated as a result of broad US dollar weakness.”

The Bank says in these very unusual times, “In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.

Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January Monetary Policy Report (MPR). The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer-term inflation expectations are little changed.

Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well-controlled.

The Governing Council will proceed carefully, paying particular attention to the risks and uncertainties facing the Canadian economy. These include the extent to which higher tariffs reduce demand for Canadian exports, how much this spills over into business investment, employment, and household spending, how much and how quickly cost increases are passed on to consumer prices, and how inflation expectations evolve.

Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.”
Bottom Line

The US is determined to impose worldwide tariffs, disproportionately hitting Canada, Mexico, and China, the US’s top trading partners. This is a misguided neo-Mercantilist policy. Mercantilism assumes that the global economic pie is fixed, so if one country prospers, another must fail. This idea of a zero-sum game was debunked in the 18th century by Adam Smith and others who showed that if countries have a competitive advantage in various products and services, all are better off by producing and trading those products with the rest of the world. It is not a zero-sum game. The economic pie grows with trade. This was the idea behind globalization and the USMCA free trade agreement.

Given Canada’s vulnerability to tariffs, the economy will suffer more than the US, which has a relatively closed economy (where exports are a small proportion of GDP). Prices will rise depending on the duration and size of the coming tariffs, but mitigating the inflation will be the weakness in economic activity. Stagflation, a buzzword from the 1970s, is back in the lexicon.

We expect the BoC to resume cutting the policy rate in 25-bps increments until it reaches 2.0%-to-2.25% this summer, triggering a rebound in home sales. Layoffs and spending cuts will dampen sentiment, but lower interest rates will bring buyers off the sidelines. Housing inventories have risen sharply with new condo supply and a marked rise in the new listings of existing homes, and home prices are falling.

Article courtesy of Dr. Sherry Cooper, Chief Economist – Dominion Lending Centres

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

April 2025 Newsletter

General Angela Calla 1 Apr

Welcome to the April issue of my monthly newsletter!

Spring has sprung for most Canadians (sorry about your luck Alberta) and along with the ever-present trusted mortgage content, this month I have some gardening inspo for anyone that wants to flex their green thumb this year. Enjoy!

Variable-Rate Mortgages: What You Should Know

Shakespeare might have thought ‘to be or not to be’ was the ultimate question, but he wasn’t living in 2025 trying to minimize bank fees and interest charges while maximizing financial returns—and having to pay $9 for a clamshell of raspberries. This month, we’re tackling a modern dilemma: ‘Should I get a variable or fixed rate on my mortgage?’ Not as poetic, but way more practical. Let’s dive in.

Understanding the Basics: Every mortgage payment has two components: principal and interest. Your choice between a fixed or variable mortgage impacts how these are structured over time.

Variable Rate Mortgages: Variable rate mortgages come in two main forms:

  • Fixed Payment Variable Mortgage – You have a set monthly payment, but the portion that goes toward principal vs. interest fluctuates. When rates go up, more of your payment goes toward interest, slowing down how quickly you pay off your mortgage. When rates go down, more goes toward the principal, helping you pay off your loan faster.
  • Adjustable Payment Variable Mortgage – The total mortgage payment fluctuates based on interest rate changes, ensuring the mortgage is paid off within the original amortization schedule. The portion of your payment allocated to interest and principal will shift as rates change.

Variable mortgages introduce an element of unpredictability, which some borrowers are comfortable with, while others prefer the security of knowing exactly what their payments will be.

Fixed Rate Mortgages: A fixed-rate mortgage means your interest rate and monthly payments remain the same throughout your term. This stability can be crucial for those who prioritize predictability in budgeting, mental well-being, or long-term financial planning. If the idea of fluctuating payments makes you uneasy, or if you want to avoid worrying about interest rate changes, a fixed-rate mortgage could be the right choice.

The Interest Rate Factor: The Bank of Canada (BoC) sets the overnight lending rate, which influences the Prime rate set by banks. Variable mortgage rates are typically based on Prime ± a lender-specific adjustment. There are eight key BoC announcements each year that can result in rate changes (or no changes at all). You’ve probably seen me cover these on social media (if not, I’d love for you to follow along!).

During the pandemic, the BoC lowered rates to 0.25% to stimulate borrowing. Rates began increasing in 2022 due to inflation, reaching 5% by mid-2023 before the BoC started cutting them in 2024. As of March 12, 2025, we’re at 2.75%, with six more rate decisions coming this year.

Risks: There are risks with both variable and fixed rates for your mortgage. With a fixed rate, the risk is that if rates drop, you will have a higher payment than what is available on the market. You’d also likely incur a penalty to break the fixed rate term to capitalize on any decreases. With a variable rate, the risk is that changing rates could increase the amortization of your mortgage. We also discussed the risk of Bank of Canada announcements indirectly changing your rate and therefore payment, impacting your budget and cash flow. And one final potential risk is if rates go up enough, it may trigger the need for a lump sum payment to your lender.

2025: What’s Next? The current rate is still above the target 2%, meaning there is room for potential decreases. However, nothing is guaranteed. Rates could hold steady or, in rare cases, even increase due to external factors like inflation spikes or international economic shifts.

Impact on Your Mortgage: If you have a variable mortgage, your rate is based on your lender’s Prime rate, which is influenced by the BoC policy rate. Your mortgage rate is typically Prime ± a lender adjustment. If the Prime rate is 6% and your lender offers Prime – 0.50%, your mortgage rate would be 5.50%.

  • With a fixed payment variable mortgage, more of your payment goes toward principal.
  • With an adjustable payment variable mortgage, your monthly payment decreases.

If you have a fixed-rate mortgage, your rate and payments remain unchanged during your term. This stability is why many borrowers prefer fixed rates, even if they sometimes come with slightly higher initial rates. Fixed rates are influenced by bond market trends rather than the Bank of Canada’s policy rate directly.

Which One is Right for You? There is no universal right answer—only the best choice for your financial situation, risk tolerance, and future plans. As your mortgage professional, I’d love to walk through your mortgage with you and discuss:

  • The pros and cons of fixed vs. variable for your specific needs.
  • How to budget for worst-case scenarios.
  • Whether breaking your current mortgage to switch makes sense.
  • Economic implications of switching between a variable and fixed rate.
  • If adjustments at renewal would benefit you?

Send me an email, text, or call anytime! I’m here to provide guidance, not pressure. Let’s find the best mortgage strategy for you!

Gardening 101: Your Spring Gardening Checklist

If you want to maximize returns on your gardening efforts, we’ve got 3 strategies to take you from garden simp to master plant manipulator.

Strategy 1: Better late than early

Seeds do best when they have an uninterrupted growth phase.

So rather than having your plants stall out in a frost, wait 2 weeks (you can do it!) after your initial instinct to plant. It may seem like it’s too late, but the plants will put it into overdrive and make it work. If you’re in doubt and want to test this theory out, plant half the seeds early, and half the seeds 2 weeks later, and see which does better by the end of the growing season. If you’re new to gardening, you might not have a clue if your tomatoes should go in March 1 or July 1, and that’s totally okay too. The Farmer’s Almanac comes to your rescue with their 2025 updated guideline of when to plant based on your postal code. Click here for details.

Strategy 2: Layout matters

Think measure once, cut twice – but for your garden. First up, arrange the tallest plants on the north side of your garden, and the shortest plants on the south side. This will make sure both your little gem lettuces and the jolly green giant snap peas both get enough sunlight. Second, do your research on how much space each plant needs to thrive so you can plan enough real estate for everyone. This website will help you with both these action items for 71 different vegetables. And don’t be afraid to actually measure out your garden. Putting string dividers in there will help you achieve the perfect layout.

Strategy 3: Weed prevention

Prevention is the best way to avoid destroying your back weeding all spring and summer. This is a bit boujee, but if you don’t have raised garden beds it might just be for you. Putting down a layer of cardboard, then adding a 5-10cms of mulch on top, makes sure the weeds stay underneath while the worms and other goodies stay on top, working hard for your soil and plants. If cardboarding your garden isn’t in the cards, just make sure that there is no open soil. If you can see it, so can a weed! Covering the dirt with a layer of mulch (doesn’t have to be fancy mulch, it can just be lawn clippings, sawdust, and the fall leaves you never bothered to rake up and put out on the curb) will prevent most weeds from having the opportunity to grow in the first place.

Hopefully these tips make you the CEO of your own garden in 2025. If you try something new based on what you read here, send me a pic or a note. I’d love to know what’s working for you and share your advice on my socials!

Economic Insights from Dr. Sherry Cooper

Since Donald Trump took office, all bets are off on the Canadian economic outlook. Most people expected more substantial growth and lower inflation as we moved into 2025. Trump’s tariffs, deregulation, attempts at massive reductions in the federal government bureaucracy and geopolitical machinations have changed everything.

VUCA is the name of the game. An acronym used initially by the US Armed Forces, VUCA stands for volatility, uncertainty, complexity, and ambiguity, and it describes the current situation to a tee. Canadian consumer confidence has fallen to its lowest level in decades. Stock markets have plummeted, the currencies are volatile, interest rates have fallen, and no one knows precisely how this will unfold.

On April 2, the US said it would impose reciprocal tariffs on countries with levies on US goods or that favour domestic producers in some way. Moreover, the president has chosen to go after Canada particularly damagingly. We are the number one supplier of steel and aluminum to the US and are now confronted with 25% tariffs. Inevitably, the economy will slow, layoffs will rise, and tariffs will be passed on to the consumer. Whether this will be a one-shot price hike or spillover into second-order effects is uncertain.

Fed Chairman Powell suggested today that inflation from tariffs will likely be transitory—suggesting that price hikes will trigger higher wage demands. Stagflation is an undesirable possibility.

Central banks do not have the tools to deal with tariff-induced stagflation. Higher interest rates might reduce inflation, but slow economic activity, and lower rates might increase price pressures. China is expected to impose retaliatory tariffs on Canadian canola oil, pork and seafood. The tariffs are push-back against Canada for imposing a 100% levy on electric cars from China and 25% on steel and aluminum.

The US is inserting disruption and disorder into a thriving trading partnership between Canada, Mexico and the US. As Jay Powell says, “It’s hard to say how this is going to work out.”

We are expecting slower growth to be dominant, brought on by VUCA. Shorter-term interest rates will fall. That, combined with more housing supply and lower home prices, should spur housing activity and bring buyers off the sidelines as we move into the Spring selling season.

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

 

Canadian GDP Growth Accelerated in Q4 to 2.6% Compared to an Upwardly Revised 2.2% in Q3

General Angela Calla 24 Mar

Canada Finished 2024 on a Stronger Note, But Tariffs Remain a Concern

This morning, Statistics Canada released the GDP data for the final quarter of last year, showing a stronger-than-expected increase in household final consumption spending, exports, and business investment. However, drawdowns of business inventories and higher imports tempered the overall growth.

In Q4, the Canadian economy accelerated, with real GDP growth reaching a solid 2.6% annualized, which was well above consensus and the Bank of Canada’s latest forecast. The growth was broad-based, led by a 5.6% increase in consumer spending. Consumer spending climbed 3.6% annually for three of the four quarters in 2024, supported by rate cuts in the second half of the year. Year-over-year, consumer outlays rose by 3.6%, marking the best pace since 2018 (excluding the pandemic). Although the tax holiday had a positive impact, it took effect very late in the quarter, suggesting that momentum was already strong before that. The housing sector also showed solid growth, increasing by 16.7%, the best gain in nearly four years, driven by a significant rise in resale activity. Business investment also contributed positively, rising by 8% due to investment in machinery and equipment.

However, inventories were a significant drag on growth, subtracting 3.3 percentage points, while net exports added 0.6 percentage points. Final domestic demand growth was recorded at 5.6%, the best quarter since 2017, excluding the pandemic. Notably, the growth figures for Q2 and Q3 were revised upward: Q2 is now at 2.8% (previously 2.2%), and Q3 is now at 2.2% (previously 1.0%).

December’s GDP came in slightly below expectations at +0.2%. Retail sales significantly contributed to this gain, increasing by 2.6% due to the tax holiday, while utilities also experienced a notable increase of 4.7% owing to more typical winter weather. The January flash estimate showed a solid rise of +0.3%, likely reflecting activity that was front-loaded ahead of potential tariffs. Nonetheless, this indicates a promising start to Q1 and 2025.

Bottom Line

The Canadian economy demonstrated strong momentum in the latter half of 2024, driven by aggressive rate cuts from the Bank of Canada that stimulated economic activity. The growth rate significantly exceeded the central bank’s forecast, coming in at 2.6% compared to the expected 1.8%. Overall growth for 2024 was also better than anticipated, at 1.5% versus the forecasted 1.3%. However, much of this growth occurred before the escalation of tariff threats.

This data may support the central bank’s decision to pause its easing cycle at the upcoming meeting on March 12. However, looming tariff threats from U.S. President Donald Trump, including a 10% tariff on Canadian energy and a 25% tariff on all other goods set to take effect on Tuesday, could complicate the bank’s decision-making.

The threat of tariffs may also account for the muted market reaction to the positive GDP report, which coincided with a U.S. report showing that the Federal Reserve’s preferred inflation gauge rose at a mild pace while consumer spending declined. On the day, Canadian government two-year bond yields fell by less than one basis point to 2.619% as of 9:10 a.m. in Ottawa, while the Canadian dollar slipped slightly, down less than 0.1% to C$1.4426 per U.S. dollar. Traders in overnight swaps assessed the odds of a rate cut on March 12 at about 43%, compared to a near 50% chance just a day earlier.

Article courtesy of Dr. Sherry Cooper, Chief Economist, DLC

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

March 2025 Newsletter

General Angela Calla 18 Mar

As the Spring season approaches, I have some updates for how to prepare your finances for the coming homebuying season. Plus, check out my fraud awareness tips as March is Fraud Awareness Month!

Spring Forward: Preparing Your Finances for the Home-Buying Season

Spring is one of the busiest seasons in the real estate market, with buyers eager to find their dream home before summer.

If you’re planning to purchase a home in Spring 2025, now is the time to get your finances in order.

Being financially prepared can help you secure a mortgage with favorable terms and make your home-buying journey smoother. Here’s how to get ready:

1. Check and Strengthen Your Credit Score

Your credit score is one of the most important factors in mortgage approval, influencing both your eligibility and the interest rate you’ll receive. A higher score can save you thousands over the life of your mortgage, so it’s worth taking the time to improve it.

  • Start by checking your credit report for errors, and if you spot any inaccuracies, dispute them immediately.
  • Pay down outstanding debts to lower your credit utilization ratio, which plays a big role in your score.
  • Avoid opening new lines of credit in the months leading up to your mortgage application, as this can temporarily lower your score.
  • By reaching out to me, I can help preserve your credit score as they will pull your credit report once to shop your application. Note: Multiple credit checks in a short period can lower your credit score.

2. Build a Strong Down Payment

The more you can put down up front, the better. A larger down payment can reduce your monthly mortgage costs, give you access to better loan terms, and, in some cases, eliminate the need for mortgage insurance.

  • Set a savings goal based on home prices in your target area so you have a clear plan.
  • Explore first-time homebuyer programs that offer down payment assistance—there are plenty of government and lender-based options.
  • Make saving a habit by automating deposits into a dedicated home savings account.
  • Avoid moving your money around to multiple accounts prior to applying for your mortgage. Lenders require a 90-day history of your down payment and a history of moving your money around can make this more difficult to easily verify your down payment.

3. Reduce Your Debt-to-Income Ratio (DTI)

Lenders use your debt-to-income ratio (DTI), aka GDS/TDS, to assess how comfortably you can handle a mortgage payment on top of your existing obligations. A lower DTI signals financial stability, improves your chances of loan approval and can expand your borrowing power.

  • Work on paying off high-interest debts or debts with high monthly payments, like credit cards and personal loans, to free up more of your income.
  • Hold off on making large purchases or taking on new loans, such as car financing, before applying for a mortgage.
  • If possible, look for ways to increase your income—whether through a raise, side gig, or freelance work—to strengthen your financial standing. Note self employed income or part time non guaranteed hours employment generally require a 2-year history.

4. Get Pre-Approved for a Mortgage

A mortgage pre-approval is a game-changer in a competitive market. It gives you a clear budget, shows sellers that you’re a serious buyer, and can even speed up the closing process.

  • Start gathering essential documents like tax returns, pay stubs, and bank statements—lenders and myself will need these to assess your financial health.
  • Reach out to me today for information to help you compare mortgage rates and terms, ensuring you get the best deal.
  • Take time to discuss your mortgage options with me, from fixed to variable rates, different term lengths, or special programs available to you.
  • Download my mobile mortgage app.

5. Budget for Additional Costs

The home price isn’t the only expense you’ll need to plan for. Homeownership comes with extra costs that can catch buyers off guard if they’re not prepared.

  • Closing costs typically range from 1.5% to 4% of the home’s purchase price, covering legal fees, land transfer taxes, and more. This is money you need on top of your down payment
  • Property taxes, Condo fees and homeowners’ insurance can add to your monthly expenses—make sure to factor them into your budget.
  • Set aside a fund for home maintenance and emergency repairs to avoid financial strain when unexpected expenses arise.

6. Research the Housing Market

Spring is a competitive time to buy, so being well-informed about the market can give you an edge.

  • Keep an eye on housing prices in your preferred neighborhoods to understand trends and pricing expectations.
  • Stay updated on current interest rates, as they directly impact affordability and your monthly payments.
  • Work with a trusted real estate agent who can help you navigate bidding wars, negotiate offers, and find the right home for your needs.

7. Consider Locking in an Interest Rate

Interest rates can fluctuate, and even a small increase can affect your monthly payments. If rates are expected to rise, securing a lower rate in advance could save you money over time.

  • Ask me about rate lock options and how long they’re valid for. Rate holds on average are valid for 120 days before they expire and a new rate hold period is requested
  • Compare fixed and variable rates to see which aligns best with your financial goals.
  • Keep an eye on Bank of Canada rate announcements and economic trends that could impact mortgage rates. Note: With recent Bank of Canada announcements variable rates which are tied to Prime are dropping.

Taking these steps now will set you up for success. The more financially prepared you are, the smoother the process will be—and the better your chances of landing your dream home at the right price.

Fraud Awareness Month: Scams to Avoid

Did you know? March is Fraud Awareness Month, making it the perfect time to learn how to protect yourself and your mortgage from fraud.

Understanding common mortgage scams and how to recognize warning signs can make all the difference in safeguarding your financial well-being.

Common Mortgage Fraud Scams

One of the most frequent types of mortgage fraud involves a fraudster acquiring a property and artificially inflating its value through a series of sales and resales. They then secure a mortgage based on the inflated price, leaving lenders and buyers at risk.

Red Flags to Watch For

Be cautious if you encounter any of the following:

  • Someone offers you money to use your name and credit to obtain a mortgage
  • You’re encouraged to provide false information on a mortgage application
  • You’re asked to leave signature lines or other sections of your mortgage application blank
  • A seller or investment advisor discourages you from inspecting the property before purchase
  • The seller or developer offers a rebate on closing that isn’t disclosed to your lender

Title Fraud: A Costly Scam

Another major concern is title fraud, which is a form of identity theft. This occurs when a fraudster, using false identification, forges documents to transfer your property into their name. They then take out a new mortgage on your home, collect the funds, and disappear—leaving you to deal with the consequences when your lender starts foreclosure proceedings.

How to Protect Yourself from Title Fraud

  • Always visit the property you’re purchasing in person.
  • Compare local listings to ensure the asking price is reasonable.
  • Work with a licensed real estate agent.
  • Be cautious of realtors or mortgage professionals with a financial stake in the deal.
  • Request a copy of the land title or conduct a historical title search.
  • Include a professional appraisal in the offer to purchase.
  • Require a home inspection to check for hidden issues.
  • Ask for receipts for recent renovations to verify legitimacy.
  • Ensure your deposit is held in trust for added security.
  • Consider title insurance—the best time to get it is before fraud occurs, not after.

Stay Vigilant and Take Action

Fraud can have devastating financial consequences, but staying proactive and informed is your best defense. If you suspect fraudulent activity, act quickly—report it to the authorities and take steps to protect your assets.

Knowledge is power, and by staying alert, you can keep your mortgage and finances secure.

Monitoring your credit report can also help stay ahead of any fraud activity pertaining to identity theft!

Economic Insights from Dr. Sherry Cooper

The outlook for the Canadian economy in the coming months presents a picture of cautious optimism with high uncertainty.  Economic indicators were expected to strengthen this year, driven by resilient consumer spending and a robust export sector.  Housing activity was poised to accelerate this year as well.

However, when the newly inaugurated US president began to threaten Canada with 25% tariffs at the end of January, home sales slowed markedly. However, challenges such as global market volatility and inflationary pressures could temper this growth.

The Bank of Canada will maintain its current monetary policy stance, carefully balancing interest rates to manage inflation while supporting economic activity. The housing market remains a key area of focus, with efforts to address affordability and supply constraints continuing to be critical. Immigration is slated to slow this year, particularly for non-permanent residents, which will ease the housing shortage. Rents have fallen sharply in recent months.

Rising costs, labour shortages, and potential import tariffs on building materials could hinder construction activity.

Tariff threats are real and unnerving. Exports account for roughly a third of Canadian economic activity. Canada sends 75% of its exports to the US,   led by energy, automobiles, and metals. Threatened attacks on these trade flows might initially spill into higher prices. Still, the primary impact would be to slow economic activity and increase unemployment, already at 6.6%, up from a cycle low of 4.8% in July 2022. In contrast, the US jobless rate is a mere 4.0% and GDP growth is a lot stronger than in Canada despite double the central bank rate cuts than south of the border.

In the event of a trade war, interest rates are more likely to fall as the BoC attempts to backstop the economy. This would decrease mortgage rates, with floating rates falling more than fixed-rate loans. About 1.2 million mortgages will renew this year, most of them at a higher rate, said real estate company Royal LePage in a report out this morning.

Almost 30% of those homeowners said they would choose a variable rate on renewal, up from 24% now on a floating rate. Sixty-six percent said they would renew on a fixed-rate loan, down from 75% now locked in.

Of those who expect their monthly mortgage payment to rise upon renewal this year, 81% said the increase would put a financial strain on their household.

There remains a good chance that Canada could avert a trade war. We’ve already taken action to tighten our border. The US could not easily replace the oil, hydroelectricity power, autos or aluminum it purchases from Canada. We are the largest export market for US products. Excluding oil exports, the US has a trade surplus with Canada. Revisions to the US, Canada, and Mexico trade deal, slated for next year, could be accelerated. The US has much bigger fish to fry than trade concerns with Canada.

On balance, interest rates are likely to fall further. Government actions to improve housing affordability and pent-up housing demand bode well for a housing revival this year. Canadian inflation is under control at about 2%, boosting the chances of additional rate cuts this year.

 

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Bank of Canada Cuts Policy Rate By 25 BPs

General Angela Calla 18 Mar

The Bank of Canada (BoC) reduced the overnight rate by 25 basis points this morning, bringing the policy rate down to 2.75%, within the neutral range of 2.25%—2.75%. Tariff tremors have already led to a decline in consumer confidence and spending, a weakening labour market, and a decline in business investment. Compound that with falling population growth, and you see why the Governing Council took the overnight rate down again even though they state that monetary policy cannot offset the impacts of a trade war.

Trade wars lead to higher prices and slower growth. The rise in prices causes consumers to tighten their belts, concerned about the impact of tariffs on their income and investments. Today, there is a 25% tariff on steel and aluminum exports to the US. This impacts Canada the most as it supplies roughly 80% of US aluminum demand. The EU introduced retaliatory tariffs on US goods in response. Canada added to its retaliation. Recent data suggest the US economy is slowing.

Monetary policy remains restrictive as the real overnight rate (2.75% minus the headline inflation rate) is 85 bps, up from the historical average of 60 bps. Five-year Government of Canada bond yields increased on the news to 2.65% compared to 4.05% in the US. The Federal Reserve is not expected to cut rates when it meets again this month.

Despite relatively strong GDP growth in Canada in the second half of last year, home sales and hiring began to slow in late January due to tariff threats, and more tariffs are yet to come. On March 20, China is expected to impose 100% retaliatory tariffs on Canadian canola oil, while pork and seafood will face a 25% levy. The Chinese tariffs are a push-back against Canada for imposing a 100% levy on electric cars from China and  25% on steel and aluminum.

On April 2, the US announced it will impose reciprocal tariffs on nations that have levied tariffs on US goods. President Trump has also said he is considering imposing retaliatory tariffs on Canadian dairy and lumber.

“We’re now facing a new crisis. The economic impact could be severe depending on the extent and duration of new US tariffs,” Macklem said in his prepared remarks.

Macklem called the uncertainty of the tariff dispute “pervasive” and said that it was “already causing harm.” Officials said the “continuously changing” US tariff threat was hitting consumers’ spending intentions and limiting businesses’ plans to hire and invest.

At the same time, Macklem said the bank “will proceed carefully with any further changes” to borrowing costs, and officials would “need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand.”

Bottom Line

These are uncertain times. The US is determined to impose worldwide tariffs, disproportionately hitting Canada, Mexico, and China, the US’s top trading partners. This is a misguided neo-Mercantilist policy. Mercantilism assumes that the global economic pie is fixed, so if one country prospers, another must fail. This idea of a zero-sum game was debunked in the 18th century by Adam Smith and others who showed that if countries have a competitive advantage in various products and services, all are better off by producing and trading those products with the rest of the world. It is not a zero-sum game. The economic pie grows with trade. This was the idea behind globalization and the USMCA free trade agreement.

Given Canada’s vulnerability to tariffs, the economy will suffer more than the US, which has a relatively closed economy (where exports are a small proportion of GDP). Prices will rise depending on the duration and size of the coming tariffs, but mitigating the inflation will be the weakness in economic activity. Stagflation, a buzz-word in the 1970s, is back in the lexicon. We expect the BoC to continue cutting the policy rate in 25-bps increments until it reaches 2.25% this June, triggering a rebound in home sales. Layoffs and spending cuts will dampen sentiment, but lower interest rates will bring buyers off the sidelines.

Article courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Save Thousands with CMHC Eco Plus & First-Time Buyer Incentives!

General Angela Calla 25 Feb

Unlock Big Savings with CMHC Eco Plus & PTT Exemptions

Are you planning to buy a home? If so, you may be eligible for CMHC’s Eco Plus program, which offers a 25% reduction in your mortgage insurance premium—either upfront or as a refund after funding, depending on the lender. We work with specific lenders who apply the savings immediately, so you don’t have to wait or go through the refund process yourself!

When combined with property transfer tax (PTT) exemptions for new construction, these savings can significantly improve your affordability.

How Does CMHC Eco Plus Work?

CMHC Eco Plus rewards buyers purchasing energy-efficient homes with a 25% rebate on their mortgage insurance premium. With the right lender, this can be deducted from your mortgage costs upfront. Otherwise, borrowers must apply for the refund after funding.

Real Savings Example

Let’s say you’re a first-time buyer purchasing a $1.1M home with 10% down:

Home Price: $1,100,000

Down Payment (10%): $110,000

Mortgage Amount (Including Insurance Premium): $1,014,990

CMHC Insurance Premium (4% standard rate): $44,990

CMHC Eco Plus Rebate (25%): $11,247

New Total Mortgage After Rebate: $1,003,743

Monthly Mortgage Payment @ 4.5% (30-year amortization): $5,070

Monthly Savings Due to Eco Plus: ~$60 per month

Total Savings Over 30 Years: ~$21,600

Additional Savings: Property Transfer Tax (PTT) Exemption

If you’re purchasing a newly built home, you may also qualify for a full or partial PTT exemption, which can save you over $18,000 upfront!

 Learn More About PTT Exemptions for New Builds: BC Government – Property Transfer Tax Exemptions

Why This Matters

 Lower Upfront Costs: Reduce your mortgage insurance premium with the right lender.

 Improve Affordability: A lower total mortgage can help with qualification.

 Long-Term Savings: Keep more money in your pocket over the years.

We Work with Specific Lenders to Get You These Savings Upfront!

Not all lenders apply the Eco Plus rebate at the time of funding—some require you to apply for the refund separately. We can connect you with lenders that offer the savings immediately, so you don’t have to go through the extra steps.

Looking for the Right Home? We Can Help!

Beyond securing the best mortgage options for you, we can also introduce you to trusted realtors who specialize in energy-efficient homes and new construction projects that qualify for these incentives.

Let’s Explore Your Options!

Our team is here to guide you through the process and ensure you’re taking advantage of every available savings opportunity.

 Contact Us Today for a Personalized Review

 Angela Calla Mortgage Team

 angela@countoncalla.ca

 604-802-3983

 www.angelacalla.ca

 Learn More About CMHC Eco Plus: CMHC Eco Plus Program

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Purchase Plus Improvements

General Angela Calla 20 Feb

Purchasing a home that requires renovations can be both an opportunity and a challenge. The Purchase Plus Improvements mortgage program in Canada offers a solution by allowing homebuyers to finance both the purchase of a property and the cost of eligible renovations through a single mortgage. Here is what you need to know about this program:

What Is a Purchase Plus Improvements Mortgage?

A Purchase Plus Improvements mortgage enables homebuyers to include the cost of specific renovations into their mortgage, facilitating immediate upgrades to their new home. This approach streamlines financing by combining the purchase price and renovation costs into one manageable mortgage payment.

Key Features of the Program:

Loan-to-Value (LTV) Ratios: Qualified buyers can finance up to 95% of the improved value of a 1-2 unit owner-occupied property. For 3-4 unit properties, the maximum LTV is 90%

Down Payment Requirements: The minimum down payment is based on the improved value of the property. For homes priced up to $500,000, a 5% down payment is required. For properties over $500,000, 5% is needed for the first $500,000, and 10% for the portion above that amount.

Eligible Renovations: Funds must be allocated for permanent improvements that enhance the properties value, such as kitchen remodels, flooring, painting, bathroom upgrades, roofing, or energy-efficient installations. Non-permanent fixtures like appliances are typically excluded.

How the Process Works:

1. Assessment and Quotes: After identifying a property, obtain detailed quotes from licensed contractors outlining the proposed renovations and associated costs.

2. Mortgage Application: Submit these quotes along with your mortgage application to your lender. The loan amount will be based on the property’s value after renovations.

3. Fund Disbursement: At closing, the purchase price is released to the seller. The renovation funds are held in trust and released upon completion of the work, which is typically verified through an inspection.

Considerations:

Completion Timeline: Renovations are generally expected to be completed within a specified period, often 90 to 180 days after closing.

Upfront Costs: Homebuyers may need to cover some renovation expenses upfront, as reimbursement occurs after project completion.

Professional Contractors: Most lenders require that licensed professionals undertake the work to ensure quality and compliance.

The Purchase Plus Improvements mortgage is an excellent option for buyers looking to customize a new home to their preferences without the hassle of securing separate financing for renovations. By understanding the programs features and requirements, you can make informed decisions and turn a potential fixer-upper into your dream home.

For more detailed information, refer to the CMHC Improvement Program and the Sagen Purchase Plus Improvements Program.

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Angela Calla on Global News What you NEED to know Variable & Adjustable Rate Mortgages

General Angela Calla 27 Jan

In case you missed our Global News Morning segment we discussed a topic that is top of mind for many: variable and adjustable rate mortgages.

In this approx. 6 minute interview we covered…

-What exactly are variable and adjustable rate mortgages?

-The key differences between the two.

-Critical terms and factors to consider when choosing the best option for you.

If you ever wondered how these mortgage options work or how to make the most informed decision, this segment is a must-watch!

We are here to or provide a personalized review of a mortgage for you or a loved one to ensure it works for you in today’s market to build and protect your wealth please email us at callateam@countoncalla.ca or call 604-802-3983

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Fall Economic Statement Delivered Despite Chrystia Freeland’s Resignation

General Angela Calla 18 Dec

 
Chrystia Freeland Resigns On The Day of The Fall Economic Statement
Finance Minister Freeland rocked markets today by submitting her resignation from Cabinet. Trudeau had asked her to take another Cabinet post, but she declined in a scathing letter accusing Trudeau of “costly political gimmicks” like “bribe-us-with-our-own-money cheques for $250 and a two-month GST holiday.

“Inevitably, our time in government will come to an end,” Ms. Freeland said, openly acknowledging what polls have been saying for over a year. “But how we deal with the threat our country currently faces will define us for a generation, and perhaps longer.”

The Federal deficit for 2023-2024 grows from $40 billion to $61.9 billion, partly boosted by a court settlement to pay funds to Indigenous children. The deficit far surpasses Freeland’s guardrail of $40.1 billion for last year’s budget deficit. New spending initiatives were announced amounting to $24 billion over the next six years. The most significant component is accelerated incentives to encourage business investment to improve productivity. This is very similar to a program issued by Finance Minister Frank Morneau years ago.

Dominic LeBlanc has been sworn in as the new Finance Minister.
Bottom Line

Today’s Fall Economic Statement took a backseat to the news that Chrytia Freeland resigned. There is more talk of a Trudeau resignation and an early election. Liberals are suggesting that Trudeau has stayed on too long, likening him to Biden. The caucus is meeting at 5 PM today.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

 

Canadian home sales rose again in November as new listings declined and prices rose

General Angela Calla 18 Dec

The Canadian Housing Market Strengthens Further

Home sales activity recorded over Canadian MLS® Systems rose again in November, building on October’s surprise jump.

Sales were up 2.8% m/m in November compared to October and now stand a cumulative 18.4% above where they were in May, just before the first interest rate cut in early June. Actual (not seasonally adjusted) monthly activity was 26% above November 2023.

The November increase was driven by gains in Greater Vancouver, Calgary, Greater Toronto, and Montreal and double-digit sales increases in smaller cities in Alberta and Ontario.

According to Shaun Cathcart, CREA’s Senior Economist, “Not only were sales up again but with market conditions now starting to tighten up, November also saw prices move materially higher at the national level for the first time in almost a year and a half. Normally, we might expect this market rebound to take a pause before resuming in the spring; however, the Bank of Canada’s latest 50-basis point cut together with a loosening of mortgage rules could mean a more active winter market than normal.”

New Listings

New listings edged down 0.5% month-over-month in November, building on a larger 3% decline in October. With sales also rising in November, the national sales-to-new listings ratio tightened to 59.2%, up from 57.3% in October. Between April and September this year, the measure had been in the 52% to 53% range. The long-term average for the national sales-to-new listings ratio is 55%, with a sales-to-new listings ratio between 45% and 65%, generally consistent with balanced housing market conditions.

“October and November marked the start of the long-awaited rebound in resale housing activity, with the combination of lower borrowing costs and more properties to choose from coaxing buyers off the sidelines,” said James Mabey, CREA Chair.

A little more than 160,000 properties were listed for sale on all Canadian MLS® Systems at the end of November 2024, up 8.9% from a year earlier but still below the long-term average for that time of the year of around 178,000 listings.

There were 3.7 months of inventory nationally at the end of November 2024, down from 3.8 months at the end of October and the lowest level in 14 months. The long-term average is 5.1 months of inventory, with a seller’s market below about 3.6 months and a buyer’s market above 6.5 months.

 

 

 

 

Home Prices

The non-seasonally adjusted National Composite MLS® HPI stood 1.2% below November 2023, the smallest decline since last April. The non-seasonally adjusted national average home price was $694,411 in November 2024, up 7.4% from November 2023.

 

Bottom Line

The Bank of Canada’s aggressive rate-cutting and regulatory changes that make housing somewhat more affordable have provided kindling for the Canadian housing market. While the conflagration isn’t likely to peak until spring, a seasonally strong period for housing, activity has already started to pick up. The November uptick in home prices could provide more impetus for potential buyers to move off the sidelines. The new housing initiatives go into effect today and tomorrow.

Debt-to-income ratios for Canadian households have improved as growth in disposable incomes continues to outpace borrowing. This bodes well for more robust residential real estate activity as the Bank of Canada continues to cut rates, albeit at a slower pace. We expect quarter-point rate cuts until the overnight rate, now at 3.25%, falls to 2.5% or even lower if US tariffs are introduced.

Article Courtesy of Dr. Sherry Cooper, Chief Economist, DLC

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

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