The rent-versus-buy debate has long divided financial experts and aspiring homeowners, with no clear winner in sight.

The traditional argument holds: While buying a home can build long-term equity and stability, renting can provide flexibility and fewer upfront costs. But as home ownership becomes a far-fetched dream for many young Canadians, can renting for life be a viable option?

Alex Avery, author of The Wealthy Renter, thinks so.

“It’s different for every person, and each individual’s needs change over time, but I’m still a firm believer that renting is a great option,” he said.

Despite rental prices having soared since publishing his book in 2016, Avery says renting is still cheaper and carries less risk than buying.

“People compare mortgage payments to monthly rental rates, but mortgage payments don’t begin to cover the full costs of home ownership,” he said. These costs can include notary fees, realtor commissions and region-specific taxes when purchasing the property as well as ongoing costs such as mortgage interest, property taxes, insurance, and various maintenance and repair expenses.

Avery was inspired to write his book during what he calls was a “speculative bubble” in the housing market at the time that he said created a perception of home ownership as an “easy out for savings,” especially in urban centres like Toronto and Vancouver.

“[Young Canadians] were being pressured to buy a condo when the math never made any sense,” he said.

Vancouver realtor Owen Bigland’s calculations paint a different picture however. With average monthly rent for a one-bedroom unit in his city now hovering around $2,800, a lifetime renter could spend at least $1.3 million by the time they’re 65 (not accounting for rent increases or inflation), according to Bigland.

“And you’ll have zero to show for it. Where’s the savings here?” he questioned.

Even if monthly rent was cheaper than a mortgage payment, Bigland said many Canadians will likely spend any savings rather than invest it and grow their wealth.

“A lot of Canadians don’t have the discipline to save as much as they should,” said Sebastien Betermier, an associate professor at McGill University who studies Canadian household spending.

With rents making up at least a third of household expenditures, and homes making up 70% to 80 % of homeowners’ wealth portfolios, Betermier says both renters and homeowners alike are exposing themselves to big risks.

Recent data from a survey by the Healthcare of Ontario Pension Plan and Abacus Data suggests the same. More than a third of Canadians report having less than $5,000 in savings, and those who own a home are increasingly relying on their home equity to fund their retirement.

Bigland preaches home ownership for this very reason. He encourages chipping away at your mortgage and building equity so you can benefit from any price appreciation in the future.

“The only real cash shelter we get in Canada is the principal residence exemption,” he said.

Put another way, “you’re essentially renting [the home] from yourself,” said Betermier. He adds that your home can act as collateral should you need to borrow against it someday. Most mortgages from big banks typically include a built-in home equity line of credit at a favourable rate, according to Bigland. “It’s accessible money without selling your home.”

Avery, however, doesn’t buy this argument.

“It presupposes that housing is a safer investment than other investments,” he said. “There are many places where house prices have gone down, where employment prospects change over time.”

As an alternative to relying on your home as an investment, Avery suggests putting your money into an RRSP, TFSA, and the FHSA which doesn’t necessarily need to go toward a home purchase. “You can learn about index ETFs too. There’s a lot of different ways to invest your money,” he said.

Avery, who’s gone the home ownership route himself, doesn’t think buying is a bad decision, but warns against it if you’re banking on it as an investment tool.

“That’s conflating two different objectives,” he said. “One is to house yourself, and the other is to generate wealth.”

But Bigland, who’s also written a book on real estate and stock investing, says you should be doing both. He agrees renting can make sense in some situations like if you’re anticipating a change in jobs, but you should consider buying if you can commit to a location for eight to 10 years.

He suggests first-time buyers start with older buildings close to public transit often sitting on valuable pieces of land. “You’ll probably have a developer [buy] in 10 or 15 years, and that might be your exit strategy,” he said. “Even if you’re a blue-collar guy, if you can get $40,000 down, maybe even forgo the car for a little while, you can do it.”

This article was written for Canadian Mortgage Trends by Cathy Miyagi.

Borrowers are caught in a mortgage rate market that changes by the week, with little sign of stability ahead.

With every passing week, the Bank of Canada faces conflicting economic signals, leaving Canadians guessing about its next move and triggering rapid changes in mortgage rates.

After several weeks with the lowest 5-year fixed rates holding above 4%, several lenders are now offering options in the high-3% range, generally for high-ratio borrowers.

“There was a two-month period where there were lots of rates available in the three’s … and then suddenly, everything headed for the fours over about a two-week period,” says Ron Butler of Butler Mortgage. “Then bond yields took a roughly 25 basis-point reduction, and now we’re back in this very aggressive state.”

Butler notes that while not every lender has followed suit, a number are again pricing select terms below 4% in the past few days, a trend that could just as easily swing back.

“Every single news item to do with interest rates, both here and in the United States, can trigger a change in bond yields and rates,” Butler says. “What we urge people to understand is that it is that volatile; rates can all go back into the fours very soon.”

Conflicting economic signals

The current volatility isn’t driven solely by the trade war and uncertainty over long-term policy, though both play a role.

According to rate expert Ryan Sims of TMG, the market is still trying to figure out how past changes to trade policies and leadership regimes are affecting both Canada and the United States.

“We’ve got two opposing forces right now and the bond market is reacting to every single report,” he says. “You’ve got inflation in Canada slowly creeping up bit by bit, but then you’ve also got the horrible jobs numbers we saw last week.”

High inflation typically pushes the Bank of Canada to raise rates, while weak employment and a slowing economy point to cuts. What’s unusual now is that both forces are appearing at once, Sims says.

Further complicating the matter is the American economic picture, which directly influences Canada’s 5-year bond yield, and with it, fixed mortgages. Though there are some cracks starting to form, the U.S. economy appears to be outpacing expectations.

“Whether you agree with the current administration or not, the data is coming in strong — employment is healthy, GDP is growing at a good clip, inflation is fairly malignant right now — so I don’t think you’ll get the rate cut from the U.S. Fed that everyone was banking on this year,” Sims explains. “It’s a lot harder for the Bank of Canada to cut when the U.S. Fed isn’t cutting.”

Even as the Bank of Canada shows little inclination to cut its policy rate, which drives the prime rate and variable borrowing costs, Canada’s big banks have been lowering mortgage rates after earlier hikes to win over renewers in a slow market.

Sims therefore advises clients to use this competitiveness to their advantage. “I’m telling clients to call their bank and say, ‘I’m working with a broker, I’m actively shopping, give me the best possible deal you can; you get one opportunity,’” he says.

The best options for borrowers right now

With the market shifting every few weeks and little clarity on its longer-term direction, experts advise borrowers to base decisions on their own risk profiles.

“I prefer the variable, and the only reason is because I have a free option to lock in at any point in time should I want to do that,” Sims says. “If I see that inflation is not letting down and I need to lock in, I can do that, but if I lock in now and rates plummet, I’m facing high [prepayment] penalties.”

The variable option, Sims adds, could offer more flexibility if Canadians face widespread job losses or economic stress in the coming years, challenges that may be tougher under a fixed mortgage.

However, Robert McLister, a mortgage strategist at MortgageLogic.news, cautions that only those prepared to monitor the markets closely and act quickly should consider a variable rate in today’s environment.

“Unless you’re bulletproof financially and need shorter-term penalty flexibility, go easy on variables,” he advises. “If you model out their performance using today’s rates and forward rate projections, their performance edge is limited for most people. Add in the real dangers of inflation and Ottawa’s fiscal mismanagement, and their appeal shrinks further.”

Instead, McLister recommends a fixed-rate mortgage of three or five years for most, or a hybrid option for those with a little bit more appetite for risk.

“Get a sufficiently long rate hold if you’re home shopping or refinancing,” he adds. “The point is: don’t bet the ranch on much more [interest rate] relief from here.”

This article was written for Canadian Mortgage Trends by:

The Canadian Real Estate Association says home sales in July rose 6.6% compared with a year ago, continuing an upward trend after the market had slowed in previous months.

A total of 45,973 homes changed hands last month, up from 43,122 in July 2024.

Home sales rose 3.8% on a month-over-month basis from June, with transactions up a cumulative 11.2% since March.

“With sales posting a fourth consecutive increase in July, and almost four per cent at that, the long-anticipated post-inflation crisis pickup in housing seems to have finally arrived,” said CREA senior economist Shaun Cathcart in a press release.

“Looking ahead a little bit, it will be interesting to see how buyers react to the burst of new supply that typically shows up in the first half of September.”

The association said the bump in sales activity was led overwhelmingly by the Greater Toronto Area, where transactions have now rebounded a cumulative 35.5% since March.

TD economist Rishi Sondhi said “pent-up demand temporarily sidelined earlier in the year returned to markets with some force last month.”

“Indeed, it looks as though the sales recovery that should have happened earlier in the year after significant (interest) rate relief in 2024 was simply delayed some months,” he said in a note.

“Some reduction in economic uncertainty should bring back more buyers in B.C. and Ontario, while further Bank of Canada rate relief could offer modest stimulus in the back half of the year. However, barriers remain, such as stretched affordability in several provinces and a weaker job market.”

Meanwhile, new listings were up 0.1% month-over-month.

There were 202,500 properties listed for sale across Canada at the end of July, up 10.1% from a year earlier and in line with the long-term average for that time of the year.

The actual national average sale price of a home sold in July was $672,784, up 0.6% from a year ago.

CREA’s own home price index, which aims to represent the sale of typical homes, was unchanged between June and July 2025.

BMO senior economist Robert Kavcic said the housing market has looked “very balanced and stable” through the summer, with significant regional variation persisting.

“At the national level, sales have steadily climbed back toward longer-term norms, inventory is elevated but not overly saturating the market, and prices are effectively flat,” he said in a note.

“In markets where price corrections are ongoing, we seem to be getting closer to levels that are bringing some buyers off the sidelines.”

This article was written for Canadian Mortgage Trends by Sammy Hudes

The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

While some elements of US trade policy have started to become more concrete in recent weeks, trade negotiations are fluid, threats of new sectoral tariffs continue, and US trade actions remain unpredictable. Against this backdrop, the July Monetary Policy Report (MPR) does not present conventional base case projections for GDP growth and inflation in Canada and globally. Instead, it presents a current tariff scenario based on tariffs in place or agreed as of July 27, and two alternative scenarios—one with an escalation and another with a de-escalation of tariffs.

While US tariffs have created volatility in global trade, the global economy has been reasonably resilient. In the United States, the pace of growth moderated in the first half of 2025, but the labour market has remained solid. US CPI inflation ticked up in June with some evidence that tariffs are starting to be passed on to consumer prices. The euro area economy grew modestly in the first half of the year. In China, the decline in exports to the United States has been largely offset by an increase in exports to the rest of the world. Global oil prices are close to their levels in April despite some volatility. Global equity markets have risen, and corporate credit spreads have narrowed. Longer-term government bond yields have moved up. Canada’s exchange rate has appreciated against a broadly weaker US dollar.

The current tariff scenario has global growth slowing modestly to around 2½% by the end of 2025 before returning to around 3% over 2026 and 2027.

In Canada, US tariffs are disrupting trade but overall, the economy is showing some resilience so far. After robust growth in the first quarter of 2025 due to a pull-forward in exports to get ahead of tariffs, GDP likely declined by about 1.5% in the second quarter. This contraction is mostly due to a sharp reversal in exports following the pull-forward, as well as lower US demand for Canadian goods due to tariffs. Growth in business and household spending is being restrained by uncertainty. Labour market conditions have weakened in sectors affected by trade, but employment has held up in other parts of the economy. The unemployment rate has moved up gradually since the beginning of the year to 6.9% in June and wage growth has continued to ease. A number of economic indicators suggest excess supply in the economy has increased since January.

In the current tariff scenario, after contracting in the second quarter, GDP growth picks up to about 1% in the second half of this year as exports stabilize and household spending increases gradually. In this scenario, economic slack persists in 2026 and diminishes as growth picks up to close to 2% in 2027. In the de-escalation scenario, economic growth rebounds faster, while in the escalation scenario, the economy contracts through the rest of this year.

CPI inflation was 1.9% in June, up slightly from the previous month. Excluding taxes, inflation rose to 2.5% in June, up from around 2% in the second half of last year. This largely reflects an increase in non-energy goods prices. High shelter price inflation remains the main contributor to overall inflation, but it continues to ease. Based on a range of indicators, underlying inflation is assessed to be around 2½%.

In the current tariff scenario, total inflation stays close to 2% over the scenario horizon as the upward and downward pressures on inflation roughly offset. There are risks around this inflation scenario. As the alternative scenarios illustrate, lower tariffs would reduce the direct upward pressure on inflation and higher tariffs would increase it. In addition, many businesses are reporting costs related to sourcing new suppliers and developing new markets. These costs could add upward pressure to consumer prices.

With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged. We 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 related to tariffs and the reconfiguration of trade. If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate.

Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US 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 from tariffs and trade disruptions are passed on to consumer prices; and how inflation expectations evolve.

We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled.

Information note

The next scheduled date for announcing the overnight rate target is September 17, 2025.

This article was releasted on the Bank of Canada website.

The Canadian Federation of Independent Business is forecasting a recession in Canada this year.

A new report from CFIB shows it’s forecasting that growth declined 0.8% in the second quarter and will contract by a further 0.8% in the third quarter.

The group says an analysis of the impact of tariffs on supply chains highlights that most firms are anticipating long-term disruptions.

CFIB chief economist Simon Gaudreault says the uncertain trade situation is impacting business confidence, resulting in paused or cancelled investments.

Private investment is expected to fall 13% in the second quarter and continue to decline by 6.9% in the third quarter.

Despite the anticipated downturn, CFIB highlights that inflation remains stable, putting the Bank of Canada in a better position to consider easing borrowing costs in the second half of the year.

This report by The Canadian Press was first published July 24, 2025 and reposted from Canadian Mortgage Trends.

Canada’s pace of new home construction edged up in June, rising 0.4% from May to a seasonally adjusted annualized rate of 283,734 units, according to the Canada Mortgage and Housing Corporation.

The seasonally adjusted annual rate (SAAR) of total housing starts reached 283,734 units, up slightly from 282,705 the month before.

Urban centres accounted for 261,705 of those units, while rural starts were estimated at 22,029.

The six-month trend measure, a smoother indicator of momentum, rose 3.6% to 253,081 units, the highest since early 2023.

The overall increase was driven by a handful of regions, with British Columbia accounting for the bulk of the gains. Starts in the province rose by 28,000 to an annualized rate of 64,200 units, led by a surge in multi-unit construction in Vancouver, where actual starts jumped 74% year-over-year.

Modest increases in New Brunswick and P.E.I. also helped lift totals in the Atlantic region.

By contrast, starts declined in seven provinces, including Ontario, Quebec and Alberta. Toronto saw actual housing starts plunge 40% compared to June 2024, while Montreal posted an 8% drop—both driven by fewer multi-unit projects.

Despite a “healthy” rate of housing starts, TD Economics expects some of the recent momentum to fade.

“Oversupply in key markets combined with slower population growth is weighing on rents, while high construction costs and near-term economic uncertainty may weigh on sales activity,” wrote TD economist Marc Ercolao.

Still, he noted that “June’s housing starts surpassed expectations, helping second quarter starts growth notch a record gain.”

This, he said, should provide a near-term tailwind for residential investment, “buffering weakness in other areas of the Canadian economy that have been put under stress in the past few months.”

This article was written for Canadian Mortage Trends by the CMT Team.

Canada’s housing agency says advertised rents in some major cities are easing due to factors such as increased supply and slower immigration, but renters are still not feeling relief.

In its mid-year rental market update released Tuesday, Canada Mortgage and Housing Corp. said average asking rents for a two-bedroom purpose-built apartment were down year-over-year in four of seven markets.

Vancouver led the way with a 4.9% decrease in the first quarter of 2025, followed by drops of 4.2% in Halifax, 3.7% in Toronto and 3.5% in Calgary. Average asking rents grew 3.9% in Edmonton, 2.1% in Ottawa and two per cent in Montreal, compared with the first quarter of 2024.

Landlords reported that vacant units are taking longer to lease, CMHC said, especially for new purpose-built rental units in Toronto, Vancouver and Calgary, where they face competition from well-supplied secondary rentals such as condominium units and single-family homes.

“Purpose-built rental operators are responding to market conditions by offering incentives to new tenants such as one month of free rent, moving allowances and signing bonuses,” the report said, adding some landlords anticipate they may need to lower rents over the next couple of years.

The agency said rents for occupied units are continuing to rise but at a slower pace than a year ago. It said higher turnover rents in several major rental markets have decreased tenant mobility, leading to longer average tenancy periods and “more substantial” rent increases when tenants do move.

In 2024, the gap in rental prices between vacant and occupied two-bedroom units reached 44% in Toronto, the highest among major cities, while Edmonton had the smallest gap at roughly five per cent.

Vacancy rates are expected to rise in most major cities this year amid slower population growth and sluggish job markets, CMHC said.

“As demand struggles to keep pace with new supply, the market will remain in a period of adjustment. This is particularly true in Ontario due to lowered international migration targets, especially in areas near post-secondary institutions,” the report stated.

“While the market may have abundant supply in the short-term, there is still a need to maintain momentum in new rental supply to meet the needs of projected future population growth and to achieve better affordability outcomes for existing households.”

Despite downward pressure on rent prices, CMHC said affordability has still worsened over time as rent-to-income ratios have steadily risen since 2020, especially in regions like Vancouver and Toronto where turnover rents are driving increases.

The latest monthly report from Rentals.ca and Urbanation said asking rents for all residential properties in Canada fell 2.7% year-over-year in June to $2,125, marking the ninth consecutive month of annual rent decreases.

Despite the drop, average asking rents remained 11.9% above levels from three years ago and 4.1% higher than two years ago, “underscoring the long-term inflationary pressure in the rental market,” the report said.

Purpose-built apartment asking rents fell 1.1% from a year ago to an average of $2,098, while asking rents for condos dropped 4.9% to $2,207. Rents within houses and town homes fell 6.6% to $2,178.

“Rent decreases at the national level have been mild so far, with the biggest declines mainly seen in the largest and most expensive cities,” Urbanation president Shaun Hildebrand said in a news release.

“However, it appears that the softening in rents has begun to spread throughout most parts of the country.”

B.C. and Alberta recorded the largest decreases in June, with asking rents falling 3.1% year-over-year in each province to an average of $2,472 in B.C. and $1,741 in Alberta.

That was followed by Ontario’s 2.3% decrease to $2,329, Manitoba’s 1.3% decrease to $1,625 and Quebec’s 0.9% decrease to $1,960. Nova Scotia’s average asking rent ticked 0.1% lower to $2,268, while Saskatchewan was the only province to record year-over-year growth, at 4.2%, to an average of $1,396.

This article was written for Canadian Mortgage Trends by Sammy Hudes

A key segment of Canada’s first-time homebuyer market appears to be delaying its purchasing plans.  A new survey by real estate giant Royal LePage suggests renters are holding back, waiting for further price declines.

The survey finds that 40% of renters, who considered buying before signing or renewing their current lease, are waiting for property prices to drop.  Another 29% are waiting for further interest rate reductions and 28% say they are continuing to rent while they save for a down payment.

The market has become more buyer friendly (prices are off their peaks, interest rates are down and supply is up) but affordability is a primary concern for renters.  Across Canada, 15% of tenants say they spend more than half of their net income on rent.  More than half of renters (53%) believe their income will not allow them to buy in their preferred neighbourhood.

Beyond the financial concerns, nearly a third of renters (31%) say they have no intention of buying.  Of that group, 40% say renting is more affordable, and another 40% simply do not want the responsibilities associated with homeownership.

At the same time rental costs, while still high, have been moderating.  One national analysis shows, average rent for a one-bedroom unit declined 3.6% year over year to $1,857 in May 2025.  Two-bedroom rents fell 4.6% to $2,225.

The survey suggests the desire for ownership remains strong with 54% of renters saying they intend to buy a home “in the future”.  Sixteen percent expect to make the move within the next two years, 21% are looking to buy in two to five years.

This article was published by the First National Financial Marketing Team.

Short-term vacation rental platform Airbnb said Friday that “thousands” of reservations in British Columbia are at risk of cancellation, accusing the province of rushing out regulations as it cracked down on the industry.

Alex Howell, Airbnb’s Canadian policy lead, said in an interview that the rules requiring short-term rental hosts to confirm their listings are legal under the changes have already led to some bookings being cancelled.

The government has said platforms such as Airbnb can’t post B.C. listings without confirming their registration with the province, but Howell said many hosts whose properties qualify can’t register due to glitches and other problems with the new system.

“Typically, we would have worked with a government for six months to do live testing, to make sure that things are working the way they should,” Howell said.

“And unfortunately in this situation, B.C. really just rushed into launching the system that hadn’t been fully tested, and that’s what’s brought us to this situation.”

She said that property owners have reported that typos and formatting errors have prevented them from registering with the province, despite meeting all the legal criteria for hosting short-term rentals.

The province had said that short-term rentals are being restricted to principal residences, a secondary suite or a structure such as a laneway house on the property, and the policy is meant to open up more units in B.C.’s rental housing market.

Howell said the timing of B.C.’s latest rules on short-term rentals is especially impactful, just ahead of the busy summer tourist season.

“Thousands of reservations across the province are now at risk,” she said. “These are registered, compliant hosts that are failing validation protocols through no fault of their own.

“And this impacts … thousands of reservations across the province, at least 50 per cent of which are domestic travellers who are following their own government’s advice to support local and travel within Canada this year.”

“We think it’s irresponsible to wait until the 23rd to alert travellers that there might be an issue,” she said. “We’re trying to get them that information ahead of time so that they can make some informed decisions.”

In a statement, Housing Minister Ravi Kahlon said the province is confident that “Airbnb will find solutions to their challenges with getting listings verified ahead of the June 23 deadline.”

“We hope that Airbnb will choose to support their hosts in verifying their listings, instead of cancelling their bookings,” Kahlon said. “This is new ground for B.C., and we are working through ServiceBC, our short-term rental branch, and the platforms themselves to help hosts comply with the requirements.”

The ministry also noted that there are 65 short-term rental platforms operating in B.C., and other platforms have been successful in supporting their hosts to get registered.

In a separate statement, the Opposition B.C. Conservatives criticized the short-term rental policies of the New Democrat government, with Prince George-Valemount legislator Rosalyn Bird saying the regulations running counter to the province’s efforts to promote local travel.

“How do you promote staycations while sabotaging the short-term rental market that makes them possible in small towns?” Bird said in the statement. “The Premier (David Eby) says ‘travel within B.C.’, and then his government kneecaps our ability to welcome those travellers.”

This article was written for Canadian Mortgage Trends by Chuck Chiang.