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.

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.

Published for Canadian Mortgage Trends by:

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: