With markets nearly split—pricing in a 40% chance of a rate cut and a 60% chance of a hold—the Bank of Canada’s upcoming rate decision on Wednesday is still very much up in the air.

And with fresh inflation data landing just one day before the announcement, Tuesday’s CPI report could be what ultimately tips the scales.

The central bank will announce its decision Wednesday morning, alongside a new Monetary Policy Report and revised forecasts.

While economists broadly agree that rates are headed lower over time, a cut this week is far from a sure thing as policymakers balance growing recession risks against still-sticky inflation.

Case for a cut: Tariffs, soft data, and a fragile outlook

RBC and Scotiabank both note that if not for escalating trade tensions with the U.S., the Bank likely would have held in March.

With those risks still elevated, RBC expects the BoC will “opt to add another ‘insurance’ 25-basis-point cut” to cushion against a possible downturn.

The central bank’s Q1 Business Outlook Survey revealed faltering sentiment, with hiring intentions at their lowest levels since the pandemic and one-third of firms now expecting a recession.

March’s jobs report also disappointed, showing a net loss in employment and a rising unemployment rate.

National Bank, however, sees a “temporary pause to assess” as the more likely outcome, noting that while soft indicators are weakening, hard economic data haven’t yet deteriorated in a meaningful way. Still, if current trends continue, NBC believes the next cut could come as early as the June 4 meeting.

Scotiabank’s Derek Holt, meanwhile, lays out the case for disinflation, pointing to a cooling job market, weaker commodity prices, and ongoing economic slack. It also warns that Canada could feel the ripple effects of a slowing U.S. economy, especially with trade barriers making it harder for Canadian exports to find buyers.

Case for a hold: Inflation risks and a cautious BoC

Even with the economy showing signs of strain, both Desjardins and Scotiabank say the Bank of Canada may choose to hold off on another cut—for now.

Desjardins points out that while rates are still expected to head lower, just how far they fall will depend heavily on how trade policy evolves.

“The direction of travel for interest rates is still lower, but where the policy rate troughs will be highly conditional on where trade policy settles,” Desjardins economists wrote.

Scotiabank sees persistent inflation as the bigger risk. The Bank’s preferred core inflation measures have continued to run hotter than expected—between 3.5% and 4% month-over-month on a seasonally adjusted annualized basis.

“These core measures have been persistently too hot straight back to last May,” says Holt. “Their persistence has tended to suggest that the BoC shouldn’t have been easing as much as it has to date, so it’s time to call time out.”

Tariff-related price pressures could also continue to feed into inflation in the months ahead, making the Bank even more cautious about cutting prematurely.

The takeaway

Whether the Bank cuts rates on Wednesday or not, the easing cycle appears far from over.

Markets still expect another 25 to 50 basis points of cuts this year, and many economists believe the next move could come as soon as June—especially if the incoming data continue to weaken.

As Scotiabank points out, what the Bank says about inflation, growth, and trade-related risks may be just as impactful as the rate decision itself.

BoC policy rate forecasts from the Big 6 banks

This article was written for Canadian Mortgage Trends by:

A new report says the national average asking rent in March was $2,119, marking the sixth straight month of year-over-year declines.

By Sammy Hudes

On a month-over-month basis, rents rose 1.5% from February, the first increase since last September.

Urbanation president Shaun Hildebrand said renters were more active in March than they’d been in recent months, likely thanks to improvements in affordability.

“However, rents are likely to continue facing downward pressure in the near-term due to the expected negative economic impact and job losses caused by the trade conflict with the U.S.,” he said in a press release.

The report said average asking rents in Canada are still 17.8% higher than they were five years ago when the COVID-19 pandemic hit in March 2020.

Purpose-built apartment asking rents declined 1.5% from a year ago to an average of $2,086, while asking rents for condominium apartments fell 3.8% to $2,232.

Ontario recorded the steepest rent declines, with combined apartment and condo rents falling 3.5% to an average of $2,327 in March, followed by Quebec’s 2.5 per cent decrease to $1,949.

B.C. saw a slight 0.6% decrease in average asking rents to $2,480 while Alberta’s average ask was down 0.4% to $1,721.

Saskatchewan led the way for year-over-year rent growth, at three per cent, to an average of $1,336, followed by Nova Scotia at 2.4% to $2,199 and Manitoba at two per cent to $1,592.

This report by The Canadian Press was first published April 8, 2025.

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Canada received a temporary reprieve from U.S. tariffs for at least 30 days, but if enacted, BMO warns the Bank of Canada may be forced to cut its policy rate to 1.50% by year-end.

That would be a full 100 basis points (one percentage point) lower than BMO’s current forecast, which expects the Bank of Canada’s rate to hit 2.50% by later this year.

BMO released its updated forecast based on the implementation of U.S. tariffs—20% on most Canadian goods and 10% on oil and gas—which were originally set to take effect today. However, at the eleventh hour, President Trump announced a 30-day delay, extending a similar deal previously made with Mexico.

BMO economist Michael Gregory told Canadian Mortgage Trends that if tariffs do eventually take effect, a more aggressive rate-cutting cycle could be back on the table.

“If tariffs are actually put in place, then -150bps enters the realm of possibilities again,” he said.

This would push Canada-U.S. overnight rate spreads beyond -225 bps, approaching the “all-time extreme” set in 1997, he added.

In the meantime, however, with any action now being postponed, Gregory said the tariffs “have shifted from being an essential certainty to now being a risk.”

BoC policy rate forecasts from the Big 6 banks

Tariffs could justify emergency Bank of Canada rate action

Believing tariffs were imminent, economists at National Bank made said there was a “strong argument” for an emergency or larger-than-usual rate cut.

“To lessen the fallout on Canada’s real economy and to simultaneously buttress financial conditions, we believe there would be a strong argument for an emergency or inter-meeting interest rate cut by the BoC,” they wrote, pointing out that a policy rate of 3% is still in the upper half of the assumed neutral range of 2.25% to 3.25%.

Beyond this immediate action, the bank also predicted that scheduled cuts in March and April, totalling 25 basis points each, could bring the policy rate down to 2.00% by spring.

Beyond affecting the Bank of Canada’s rate-cutting path, tariffs are expected to put significant pressure on the Canadian dollar and economic growth, with some warning they could push the economy into recession. Experts also highlight the risk of inflationary pressures if tariffs persist.

However, all of this remains speculative and hinges on what happens over the next 30 days.

As part of the deal to delay tariffs, Canada has pledged to step up efforts on border security and the flow of fentanyl by working closely with U.S. officials. This includes expanding its $1.3-billion border protection plan, listing cartels as terrorist organizations, and launching a new cross-border task force.

Canada is also committing an additional $200 million to fight drug trafficking and appointing a fentanyl czar to lead the charge.

This article was written for Canadian Mortgage Trends by:

Canada Mortgage and Housing Corp. says high housing costs are restricting population mobility in the country, as Canadians are finding that it’s too pricey to buy or rent in cities where they seek jobs.

The federal housing agency said its analysis shows that a one per cent increase of housing prices in a destination city leads to a corresponding one per cent decline in the number of people moving there.

Since 1990, the percentage of households in Canada moving each year — including within municipalities — has dropped from nearly 17.8% to just 10.1% in 2020.

“This trend reflects many factors including population aging and technological changes, but housing costs have a role to play as well,” said CMHC deputy chief economist Aled ab Iorwerth in an online post.

He said the inability to move due to high housing costs is felt by both current workers and those new to the workforce, which limits skill development and reduces the economic growth of major cities.

“When choosing where to live and work, Canadians not only look at the wage increase they might get. They must be realistic about housing costs if they have to move to a new location,” ab Iorwerth wrote.

“And they may give up on opportunities given by a new job that improves their skills and knowledge — and hence the productivity of the country — if they can’t afford to cover the cost of housing after moving.”

Employers in cities with more expensive housing are subsequently forced to offer higher salaries to attract skilled workers to compensate for their cost of living, which raises business expenses and lowers productivity.

The analysis said Toronto, one of the two most expensive major cities in the country to purchase a new home, could boost its population by three per cent if it doubled its housing starts over the next decade.

Ab Iorwerth said that while many attribute the lack of affordability in Toronto and Vancouver to their growing populations, data shows Calgary and Edmonton have remained relatively more affordable despite faster population growth over the past two decades.

“The reason for this is that more housing supply keeps house prices under control relative to income, which in turn attracts people,” he wrote.

“Population growth can be accommodated if there is sufficient housing supply. In contrast, if there is insufficient housing supply then more people arriving in a city will lead to higher house prices limiting growth of the city.”

This report by The Canadian Press was first published Jan. 30, 2025, and found on Canadian Mortgage Trends.

Former Scotiabank Mortgage head John Webster weighed in, noting that the big banks’ competitive pricing is unsustainable and unlikely to continue for long.

A mortgage rate war is expected to intensify, with more than half of all mortgages held by Canadian banks set to renew over the next two years, says an RBC analyst.

With interest rates now down from peak levels, mortgage shoppers—especially those with mortgages locked in at historically low rates—will have a “strong incentive” to shop around for better deals, creating intense competition among lenders, RBC analyst Darko Mihelic wrote in a recent research note.

“In today’s market, lower mortgage rates will make a significant difference for Canadians whose mortgages were originated at all-time low interest rates,” he noted. “For a mortgage that was taken out in June 2020, a 50-basis-point impact in the renewal rate would result in annual savings of about $1,000.”

He adds that this will likely prompt mortgage brokers to “actively mine” their databases and preemptively reach out to clients to help them find more attractive renewal terms.

Mihelic points out that TD Bank, facing restrictions on its U.S. expansion, may turn its focus toward Canadian mortgage renewals in an effort to meet its financial targets. This could push other major players to sharpen their competitive edge.

“All Canadian banks view mortgages as a significant anchor product and, currently, loan growth across multiple loan categories is very low,” Mihelic said. “The chance to grab market share from a competitor is significant.”

A competitive challenge for brokers

Many brokers have pointed out that it’s becoming increasingly difficult to compete with the Big Banks, especially given their unusually aggressive mortgage rate pricing.

At a recent public appearance, John Webster, former CEO of Scotia Mortgage Authority, said there’s been a lot of “silly business” going on among the big banks as they strive to meet quarterly revenue targets. However, he added that it’s “a little bit early to say it’s solely driven by market share.”

He referenced Mihelic’s report, suggesting there’s been a “confluence of circumstances” that are driving the big banks to be more competitive on their mortgage product pricing, including TD’s recent troubles in the U.S. and CIBC having “challenges” with gaining market share.

“I don’t think that will continue,” Webster said. “I suspect in the first quarter…there will be more rationality in pricing, at least I hope so. It’s not sustainable.”

This article was written for Canadian Mortgage Trends by:

Average asking rents declined nationally on a year-over-year basis for the first time in more than three years in October, said a report out Thursday.

By Sammy Hudes

The report from Rentals.ca and Urbanation found average asking rents across Canada sat at $2,152 in October, down 1.2% from the same month in 2023 — the first national decrease since July 2021.

The decline is mainly concentrated in Canada’s major urban centres, with cities like Toronto, Vancouver, Calgary, and Montreal seeing rent decreases.

Urbanation president Shaun Hildebrand said it is rare for rents to decline year-over-year at the national level.

“This is happening as the key drivers of rent growth in recent years — a strengthening economy, quickly rising population, and worsening homeownership affordability — are beginning to reverse,” said Hildebrand.

“As a result, we can likely expect this trend for rents to continue in the near-term, particularly as apartment completions remain at record highs.”

B.C. and Ontario recorded the most significant annual rent decreases among the provinces, with the former seeing average asking rents for apartments down 3.4% to $2,549 and the latter recording a 5.7% drop to $2,350.

Rents rose 17.1% in Saskatchewan, which remained the fastest-growing province in the country in terms of asking price, after seeing 23.5% annual growth in September.

By city, Toronto recorded the largest annual decline in asking rents for apartments in October, at 9.2%, to reach an average of $2,642. Vancouver saw an 8.4% year-over-year rent decline to an average of $2,945, while Calgary apartment rents fell 4.7% to $1,995.

In Montreal, average rents were down 2.9% at $1,987. Ottawa apartment rents held steady with a 0.4% annual increase to reach $2,207.

However, Edmonton led rent growth in Canada’s largest markets as apartment rents rose 8.4% annually to an average of $1,584.

Based on the report, the average asking rent for a one-bedroom unit in Canada was $1,923 in October, down 0.8% from a year ago. The average asking price for a two-bedroom unit was $2,308, down 0.2%.

Overall, asking rents for purpose-built rental apartments in October rose 1.7% compared with a year earlier to reach an average of $2,100.

Meanwhile, condominium apartment rents, which averaged $2,265, were down 3.8%.

This report by The Canadian Press was first published Nov. 7, 2024.

Everyone starts building their credit score somewhere — and for many, it’s getting that first credit card during college or university.

By Nina Dragicevic

These products are “sticky,” said Robin Taub, a chartered professional accountant in Toronto, and author of “The Wisest Investment: Teaching Your Kids to Be Responsible, Independent and Money-Smart for Life.”

“Once you have a relationship and a card or accounts with one bank, you don’t often change,” she said. “That’s why you’re seeing so many of these (credit card) promotions and kiosks on campus.”

Facing a likely long-term commitment with whichever card they choose, students should be picky in the face of “giveaways and freebies,” she added.

The top three considerations when choosing a card are annual fees, interest rates and rewards, said Taub. The first two should be as low as possible, while the third should be as high as possible, based on your lifestyle.

Most credit cards carry interest rates of around 20 per cent, with cash advances higher, although there may be promotional rates offered at signup. In this stage of their financial life, however, Taub said students shouldn’t tangle with interest at all.

“Just understand the minimum payment — when you go into your (statement), they make that minimum payment a little more visually obvious than the full amount, right?” she said. “Don’t just pay that minimum balance, because then you’re carrying a balance at that rate of interest.

“Try and pay the full amount, and pay it on time to avoid penalties and interest,” Taub added, “and to build a credit rating.”

Paying your full balance each month shows you’re using credit correctly — you’re budgeting — your spending doesn’t exceed your earnings. Young consumers are still getting into trouble during this life phase, said Thuy Lam, a certified financial planner at Objective Financial Partners.

“I see so many students — even when I was a student, my own friends — get into $20,000, $30,000, and $40,000 of credit card debt during school years because they don’t realize that, ‘Oh, it’s not free money,’” she said.

Get a low limit and resist any offers to increase it until you’ve established good spending habits, Lam added. For students with minimal cash flow — not working part-time during school, little savings — this credit card barely needs to be used at all.

You can drop one recurring bill on your card, like a phone plan. A small amount is easy to pay completely and having it show up every month establishes a good history of timely payments.

“I think the key is keeping in mind: what is the purpose of a credit card?” Lam said. “And for students, that’s No. 1: facilitating small bill payments and, No. 2: building and establishing credit.

As for rewards, Taub pointed out that some students may have support from their parents, savings, RESPs, or scholarships — and with those resources, they might find value in travel, concerts or other lifestyle perks.

But she also noted most students are struggling financially; a recent TD survey found 65 per cent of students said they were financially unstable. There may be more value in a simple cash-back card.

Lam agreed — sometimes rewards are a flashy lure to students who may not yet be in the position to make those rewards worthwhile.

“I tend to recommend a no-fee card, and just a very simple, percentage cash back,” Lam said. “Whether it’s for groceries or overall spending — just keep it simple that way, and to stick with one credit card in the beginning.”

Once you have a strong credit score, and perhaps a better financial situation, you might receive offers for other cards with better benefits, Lam said. There may be a signup promotion for thousands of reward points — but it’s smart to keep your first card going, even if you add something new.

“History and track record is so important,” Lam said. “When it comes to building a really good credit score, you want one card and you want to keep it for a long time. Let’s say you were to get a second card at some point — don’t necessarily cancel the first one because that has the longest history.”

Go slow, keep limits low, and build good habits around budgeting and spending, Lam said. She recommends everyone put aside a few minutes each month to review transactions on their credit cards.

“There could be fraud happening — that’s happened a few times (to people I know) — or someone charged you the wrong amount, or you didn’t get a refund,” Lam said.

And scanning your statement is a moment to look back on the month: “It’s a reflection point to ask yourself, ‘Okay, is this what I intended on spending?’”

This report by The Canadian Press was first published Oct. 1, 2024.

Both of the main candidates in British Columbia’s election campaign pushed their own plans to solve parts of the housing crisis.

By Nono Shen and Brieanna Charlebois

B.C. Conservative Leader John Rustad told a news conference in Surrey that his government would end the multi-year permit delays and would get homes built at the speed and scale needed to address the housing crisis.

NDP Leader David Eby went to Cumberland on Vancouver Island to promote his party’s plan to fast-track factory-built homes.

Eby said pre-built homes would cut waste, reduce emissions, and advances in the industry mean the homes are “beautiful and high-quality.”

He said the process was “more like Lego” than normal construction.

“The idea is pretty straightforward. In a controlled factory environment, you can build faster, you can build with less waste and the homes that are built are more consistent and more efficient and it’s cheaper.”

Rustad said the Conservative Party of B.C. would redesign the approval process for home building, setting a six-month limit for rezoning and development permit and three months for a building permit.

“This means that we will significantly be able to improve the time frame it takes to actually get construction happening in this province, and we’ll be working with city halls across the province to be able to meet these timelines,” Rustad said.

If a clear yes or no isn’t issued by a city within that limit, the province would issue the permit, said a B.C. Conservative news release announcing the platform.

Rustad said the party would remove NDP taxes on housing, support transit-oriented communities, reform development cost charges and make taxes fair for homeowners.

“We have so much regulation that has been put in place associated with housing that it makes it really difficult for anybody to be able to actually get through and build things, not to mention the cost,” he said. “So we’ll amend the Local Government Act to prevent any home killing red tape that has been introduced by this government.”

The party’s statement also outlined their zoning plan, adding that it would work with BC Assessment “to make sure that current homeowners don’t get hit with higher tax bills based on future potential.”

The party statement said, if elected, a Conservative government would build new towns, saying B.C. is blessed with an abundance of land, but the NDP refuses to use it to end the housing shortage.

“We will identify land outside the Agricultural Land Reserve that has the potential to support beautiful new communities.”

A statement issued by the NDP on Friday said it would work with industry, municipalities and First Nations to create a provincewide framework for prefabricated homes so builders know what’s required in every community.

It said there would be a pre-approved set of designs to reduce the permitting process, and it would work to develop skills training needed to support prefabricated home construction.

The statement said Scandinavian countries had embraced factory-built homes, which “offer an alternative to the much slower, more costly process of building on-site.”

“By growing B.C.’s own factory-built home construction industry, everyone from multi-generational families to municipalities will be able to quickly build single homes, duplexes and triplexes on land they already own,” Eby said.

The party said legislation passed by the NDP government last year was a “game changer” for the factory-built home construction industry in the province, where there are currently 10 certified manufacturing plants.

Muchalat Construction Ltd. is one of them, and owner Tania Formosa said pre-approved structures speed up the building process considerably.

She said her company’s projects currently take 12 to 13 months to complete, from startup design to getting the house on site.

“If everything was in place and fast-tracked at the beginning and we were able to just fly along, it would probably take three months off the full schedule,” she said.

She said a main issue for modular manufacturers is that work gets stalled if they run into roadblocks with jurisdictions or BC Housing in the approval process.

“There’s no option for the manufacturer to start another project,” she said. “Having our products approved prior to the process would be amazing.”

She acknowledged the potential drawback of pre-approved designs creating a cookie-cutter look for some neighbourhoods.

“Unfortunately (what) happens in your jurisdiction, in your city, is it ends up looking a lot the same, but what are your priorities?”

This report by The Canadian Press was first published Sept. 27, 2024.

OSFI has confirmed that it will remove the requirement for lenders to apply the Minimum Qualifying Rate (MQR) to straight switches of uninsured mortgages.

This article was written for Canadian Mortgage Trends by:

Economists anticipate that Canada’s annual inflation rate in August fell to its lowest level since March 2021.

By Sammy Hudes

“Unless there’s something lurking out there that we’re not aware of, it looks like we’re headed for a pretty favourable reading,” said BMO chief economist Douglas Porter.

RBC economists Nathan Janzen and Claire Fan said in a report last week that those expectations would put the headline inflation rate just a hair over the Bank of Canada’s two per cent inflation target.

“Most of that August slowing is expected from a pullback in gasoline prices, but the (Bank of Canada’s) preferred core CPI measures are also expected to trend lower, with the closely-watched three-month annualized growth rate easing from an average of 2.6% in July,” the RBC economists said.

The continued progress on slowing inflation comes as the central bank has signalled a willingness to speed up cuts to its key lending rate if circumstances warrant.

The Bank of Canada reduced its key lending rate by a quarter-percentage point earlier this month — the third consecutive cut — to 4.25%. Governor Tiff Macklem said the decision was motivated by falling inflation, noting if the CPI moving forward “was significantly weaker than we expected … it could be appropriate to take a bigger step, something bigger than 25 basis points.”

On the other hand, Macklem said if inflation is stronger than expected, the bank could slow the pace of rate cuts.

Inflation has remained below three per cent since January and fears of price growth reaccelerating have diminished as the economy has weakened.

Porter said despite progress on the inflation rate, it’s still “not in a place where it’s a compelling argument that the bank has to go even faster.”

He forecasts the central bank will cut its key lending rate by a quarter-percentage point at every meeting until July 2025, bringing it down to 2.5 per cent by that time. That prediction also comes after data released last week that showed Canada’s unemployment rate rose to 6.6% in August from 6.4% in July.

However, Porter said it’s possible the bank could speed up its rate cutting cycle if inflation continues easing.

“If we’re going to be wrong, it’s that we’re going to get to 2.5% even more quickly and possibly lower than that,” said Porter.

“There is a case to be made that if the economy were to weaken further, there’s little reason for the bank to keep rates in what they consider to be the neutral zone. They could go below that.”

Shelter costs have remained the main driver of inflation as Canadians face high rents and mortgage payments. Porter noted that when factoring out housing costs, inflation in both Canada and U.S. is hovering slightly above one per cent.

“So really, the only thing keeping Canadian inflation above two per cent is shelter and it does look like shelter costs are probably going to fade,” he said.

“It looks as if rents are starting to moderate. They’re not necessarily falling, but not rising as quickly. And of course with interest rates coming down, ultimately the big kahuna here, mortgage interest costs, will recede as well.”

With the U.S. Federal Reserve set to meet on Wednesday, Janzen and Fan said they expect the American central bank to announce its first rate cut in four years.

“Gradual but persistent labour market softening and slowing inflation make it clear that current high interest rates are no longer needed,” they wrote.

“We think governor (Jerome) Powell’s comments will likely stay on the cautious side — hinting at future rate cuts without committing to a pre-determined path to allow for more flexibility in future decisions.”

—With files from Nojoud Al Mallees in Ottawa

This report by The Canadian Press was first published Sept. 15, 2024.