LIVEHERE REAL ESTATE

Quick Facts: Canada’s economy contracted 0.1% annualized in Q1 2026 after a downwardly revised 1.0% decline in Q4 2025, marking two consecutive quarters of contraction and a technical recession for the first time since 2020. The result badly missed the consensus forecast of 1.5% annualized growth, with business capital investment falling for the fifth straight quarter and residential investment dropping 2.0% as resale activity plunged 9.9%. Markets are pricing a 98% chance the Bank of Canada holds at 2.25% on June 10, with a 2% chance of a hike and zero probability of a cut, despite the recession data. A flash estimate for April suggests 0.4% monthly GDP growth, but the Bank of Canada faces the same dilemma: the domestic economy needs rate cuts while oil-driven inflation makes easing risky. Statistics Canada reported this morning that the economy contracted at an annualized rate of 0.1 percent in the first quarter of 2026, following a downwardly revised 1.0 percent decline in the fourth quarter of 2025. That makes two consecutive quarters of contraction, putting Canada in a technical recession for the first time since the start of the pandemic. Before that, the last occurrence was during the oil shock of 2015. That result was far worse than expected. Economists polled by Reuters and the Bank of Canada itself had forecast annualized growth of 1.5 percent, meaning the actual outcome missed by roughly 1.6 percentage points. Yet markets are still pricing a 98 percent chance the Bank holds at 2.25 percent on June 10, with just a 2 percent chance of a hike and zero probability of a cut. What the Numbers Actually Show On a quarterly basis, real GDP was flat in the first quarter, which means the annualized contraction of 0.1 percent was driven by rounding and seasonal adjustment rather than a sharp downturn in a single month. However, the composition of the quarter tells a weaker story than the headline suggests. Business capital investment fell 0.7 percent, marking the fifth consecutive quarterly decline. Residential investment dropped 2.0 percent, with resale housing activity plunging 9.9 percent in the first quarter alone. Government capital investment fell 2.5 percent as weapons spending slowed from the elevated levels at the end of 2025. Imports surged 2.9 percent, driven largely by gold, while exports edged down 0.1 percent as passenger car and light truck shipments declined under the weight of U.S. tariffs. Household spending was the one bright spot, rising 0.4 percent on financial services and food. But even that came at a cost: the household saving rate fell to 3.5 percent, its lowest level in two years. Why This Recession Feels Different What makes this technical recession unusual is that corporate incomes are actually rising. Corporate profits grew 1.6 percent in the first quarter, the third consecutive quarterly increase, driven almost entirely by the energy sector as global oil prices surged. The GDP deflator rose 1.1 percent, with export prices up 3.4 percent on the back of higher crude. That creates a split economy. The energy side of Canada is generating strong profits from elevated oil prices, while the consumer and investment sides are weakening under the combined weight of tariffs, high borrowing costs, and declining housing activity. For the Bank of Canada, this is the worst kind of recession to manage because the standard remedy of cutting rates risks making the oil-driven inflation problem worse. On a per capita basis, real GDP actually rose 0.2 percent in the first quarter because the population declined for a second consecutive quarter. That statistical quirk does not change the underlying picture, but it does mean the recession is being shaped by falling demand and reduced immigration as much as by any single economic shock. What This Means for Canadian Mortgage Rates Variable rates are tied to the Bank of Canada’s overnight rate through prime, and this morning’s data strengthens the case for cuts. The Bank has held at 2.25 percent for four consecutive decisions, but two quarters of contraction put pressure on that hold. A result that missed the Bank’s own forecast by 1.6 percentage points makes patience harder to justify. However, the same constraint that has kept the Bank on hold for months still applies. Oil prices remain elevated, the GDP deflator is rising, and Governor Macklem warned last month that consecutive rate increases are possible if energy costs bleed into broader inflation. A technical recession makes that threat harder to deliver, but it does not eliminate it. Fixed rates follow GoC bond yields, and if the recession data continues to point toward weakness, those yields should drift lower, which would eventually pull fixed rates down. But U.S. Treasury yields remain elevated because the American economy is still growing, and that puts a floor under Canadian bond yields. Until the Bank actually moves, fixed-rate pricing is unlikely to shift significantly in either direction. What Could Change the Picture The flash estimate for April GDP came in at 0.4 percent monthly growth, driven by a rebound in mining, quarrying, and oil and gas extraction. If that number holds and May follows a similar path, the technical recession could look like a one-quarter stumble rather than the start of a prolonged downturn. In that case, the Bank would have less reason to cut, and rates would likely stay where they are. The opposite risk is that the USMCA review beginning July 1 triggers new trade barriers, or that oil prices climb further on an escalation of the conflict in the Middle East. Either scenario would deepen the downturn while adding to inflation, forcing the Bank into the position of choosing between supporting growth and fighting prices. Bottom Line Canada is in a technical recession for the first time since the pandemic, and the economy missed the Bank of Canada’s own forecast by a wide margin. That should put pressure on the Bank to cut rates, but markets are pricing a 98 percent chance of a hold on June 10 because oil-driven inflation has not gone away. But the oil shock has not gone away, and the Bank cannot cut into rising inflation without risking its credibility. For mortgage holders, the most likely near-term outcome is that rates stay where they are while the Bank waits for clearer data. If the April rebound holds and oil prices ease, cuts become possible later this summer, and that is the scenario where both variable and fixed rates come down.

What Maintenance Does an Investment Property Actually Need? Owning a rental property doesn’t have to mean constant headaches, but it does require consistency.

The Bank of Canada Maintains Its Interest Rate Policy to Close Out April April 29, 2026 Despite rising oil prices and global trade friction, the Bank of Canada has once again chosen to keep its overnight policy interest rate at 2.25%. This decision is good news for those who feared the Bank would raise rates to combat recent oil-price-driven inflation, but it does lead to speculation about what comes next — and when. To understand the Bank's thinking, here is a summary of its April 29, 2026 observations and outlook. Canadian Economic Performance and Outlook After contracting in the fourth quarter of 2025, growth is forecast to have resumed in early 2026. Consumer and government spending are supporting economic activity, while tariffs and trade uncertainty are weighing on exports and business investment. The Bank's April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028, as growth in exports and business investment resumes along "a lower trajectory." The outlook for economic growth in Canada is little changed from the Bank's January Monetary Policy Report (MPR) projection. Inflation Global inflation, measured by the Consumer Price Index (CPI), climbed to 2.4% in March due to sharply higher gasoline prices. The March increase follows several months of slowing inflation data. Core inflation has been easing and held steady at just above 2% in the most recent inflation report. The proportion of components that make up the "CPI basket" has also declined in recent months. Canadian Housing and Employment Housing activity declined in the fourth quarter and is being held back by slow population growth, economic uncertainty, and ongoing affordability issues. The labour market is soft, with subdued employment growth over the past year and job losses in sectors targeted by US tariffs. The unemployment rate remains in the 6.5% to 7% range, reflecting both weak hiring and fewer job seekers. Global Economic Commentary In the United States, growth is still expected to be solid over the Bank's projection horizon, boosted by AI-related investment and consumption growth. China's economy is being supported by robust exports. In the euro area, higher prices for oil and natural gas will weigh on economic activity. Overall, the global economy is expected to grow by about 3% in 2026, 2027, and 2028. The Bank's projections for inflation over the next year have been revised up because of the jump in energy prices. Financial Conditions and Bond Yields Financial conditions have been volatile, reflecting daily developments in the Middle East and shifting market expectations for inflation and interest rates. Bond yields are modestly higher since January, while equity markets — which weakened sharply at the outset of the war — have recovered. Since the start of the war, the US dollar has appreciated against most major currencies. The Canada-US exchange rate has been relatively stable. War in the Middle East and Shifting Trade Patterns The Bank again made special mention of the evolving conflict in the Middle East, saying it is "causing heightened volatility." It further added that the Iran war has led to sharply higher energy prices and transportation disruptions, "diminishing growth prospects in oil-importing countries and boosting inflation worldwide." It also noted that US trade policy continues to reshape global trade patterns. Both trade policy and the conflict in the Middle East are "ongoing sources of uncertainty." The Bank's April outlook assumes tariffs remain unchanged and the global benchmark price of oil declines to US$75 per barrel by mid-2027.  Rationale for Today's Decision and Outlook In commenting on its decision to hold its policy rate steady, the BoC made several key points: With GDP growing slightly above potential, the current excess supply in the economy will be gradually absorbed. While the war in Iran may alter its composition, overall GDP growth is little changed in the updated forecast. Since Canada is a large net exporter of oil, higher oil prices increase national income even as consumers are squeezed by higher gasoline prices. As expected, so far there is "little evidence" that oil prices have fed through more broadly to goods and services prices — but this warrants close attention in the months ahead. Near-term inflation expectations have moved up with higher gasoline prices and still-elevated food price inflation, but longer-term inflation expectations have remained "anchored." CPI inflation will likely rise further in April to about 3%. Based on the assumption that oil prices will ease, inflation is forecast to come down to the 2% target early next year and remain around 2% over the projection horizon. The Bank offered that "against this backdrop," and taking into account its current projection, it decided to maintain its policy rate at 2.25%. The Bank further stated: "We are closely monitoring the impact of the conflict in the Middle East and how the economy is responding to US tariffs and trade policy uncertainty. The Bank's Governing Council is 'looking through' the war's immediate impact on inflation but will not let higher energy prices become persistent inflation. As the outlook evolves, we stand ready to respond as needed." Next Up The Bank is scheduled to make its next policy interest rate announcement on June 10th. First National's executive summary will follow. In the meantime, please visit the Resources page of this website for other important insights.

This morning, Canada’s GDP rose just 0.1% in January, beating the consensus forecast of zero growth but pointing to a fragile economy heading into the Iran oil shock.

Every so often, something happens in the mortgage world that reinforces an important truth: your mortgage experience depends enormously on the expertise of the person guiding you. A young couple we had pre-approved earlier this year recently had an experience that highlighted this in a very real way. Their story isn’t stressful or dramatic — it’s simply a helpful reminder of why choosing the right support can make your home-buying journey smoother.

Here's a breakdown of Canada’s first time home buyer (FTHB) programs To start, each program defines a first time home buyer in a different way, which can make things confusing to some clients. Here are the three major programs Canadians most often utilize: The Ontario Land Transfer Tax Rebate; The RRSP Home Buyers’ Plan (HBP); The First Home Savings Account (FHSA). Ontario land transfer tax rebate If you’re buying property in Ontario, the land transfer tax (LTT) rebate is available. It can save you up to $4,000 on the provincial land transfer tax, plus up to another $4,475 on the Toronto municipal land transfer tax if you’re buying in Toronto. The LTT rebate has strict guidelines in order to qualify: -You must be at least 18 years old -You must have never owned a home or any interest in a home anywhere in the world -You must live in the home as your principal residence within nine months of the purchase -Your spouse or common-law partner must also never have owned a home while you’ve been together -residency restrictions also apply RRSP Home Buyers’ Plan The HBP allows qualified FTHB to use up to $60K in RRSP savings to help with a down payment. To qualify: -You must not have lived in a home that you (or your spouse/common-law partner) owned in the current year or the four preceding calendar years -You need a signed agreement to buy or build a qualifying home -You must intend to make that home your principal residence within one year -You must be a resident of Canada at the time of the withdrawal and when you buy the home First Home Savings Account To open and use an FHSA: -You must be between 18 and 71 years old and a Canadian resident -You must not have owned or jointly owned, or lived in, a qualifying home in the calendar year before you open the FHSA or during the previous four calendar years. *This rule also considers property owned by your spouse or common-law partner that you lived in Does being a first-time buyer impact your mortgage? For a High Ratio/ Insured mortgage, being a FTHB can provide additional options: -Previous home owner buyers are eligible for a 30-year amortization with mortgage insurance only when purchasing newly built homes. -First-time homebuyers are eligible regardless of whether they are buying a new or resale home. Educating first time home buyers is our job. Supporting your home ownership journey from beginning to end is our purpose. We don't just help you buy it - we help you own it. Reach out to see what we can do for you!

A practical guide to Canadian home buyer tax credits, renovation rebates, and accessibility programs. See how much you can save.

As of mid-2025, the worst of the tariff turbulence looks to be in the rearview mirror, and Canada’s economy appears to be charting a slow, cautious course forward. This keeps future rate cuts on the table, but only if warranted by clear evidence of further weakness. The Canadian job market is gradually regaining its footing after the tariff-induced jolt earlier this year. This tentative stabilization, coupled with cooling inflation, has bought the Bank of Canada time to hold interest rates steady. While global issues from the U.S.-induced trade war persist, the current outlook is for moderate growth and steady rates for the time being. Quick Takes: Canada’s labour market is soft but stabilizing, with July job losses offset by a steady 6.9 percent unemployment rate and limited new damage in trade-exposed sectors, suggesting the tariff shock is largely behind us. Inflation has eased toward 2 percent while growth is mixed, so the Bank of Canada is holding at 2.75 percent, and mortgage rates are likely to remain broadly stable for now. Key watch points are core inflation, employment, and U.S. policy, since a clear domestic slowdown could reopen the door to cuts while a firm U.S. economy and a cautious Fed limit how far Canadian yields can fall. First National Financial LP - Capital Markets Update - Aug 15 2025 Canada’s job market has been on a rollercoaster in 2025 because of trade uncertainty and tariffs. After a brief steady patch in late 2024 and early 2025, unemployment began edging up again, especially in trade-sensitive industries. The latest July employment report reflects this volatility: Canada shed 41,000 jobs in July, erasing roughly half of June’s outsized gain (+83,000), yet the unemployment rate held at 6.9% (just below May’s 7.0%). In other words, July’s job losses were significant but not enough to push unemployment higher, thanks in part to some workers leaving the labour force. Indeed, Statistics Canada noted the uptick in unemployment over the past year has been driven more by longer job searches and new entrants struggling to find work, rather than mass layoffs. Encouragingly, July’s pullback in employment was not concentrated in export-driven sectors as one might expect from tariff impacts. The manufacturing and trade sector employment was largely unchanged on the month (with transportation and warehousing even adding 26,000 jobs). Instead, the declines came from areas like information, culture, and recreation (-29k) and construction (-22k), as well as a notable drop in summer youth employment. Overall, Canada’s labour market remains softer than usual, but recent data hints at stabilization. The July labour market data is showing that tariff-related suggests that tariff-related damages may already be behind us, with leading indicators like business sentiment and job postings starting to stabilize over the summer after a pronounced cooling in the spring. In plain terms, the worst shock to hiring from the tariff turmoil may be behind us. That said, conditions vary widely across sectors and regions. Tariff anxiety has undeniably dampened hiring plans broadly, and actual job losses remain concentrated in industries tied to cross-border trade. Manufacturing employment, for example, is down compared to a year ago, with Ontario accounting for over 60% of the past year’s increase in unemployment as factories shed jobs. Southwestern Ontario cities like Windsor have seen jobless rates spike into the double-digits amid the auto sector slowdown. In contrast, areas less exposed to U.S. trade, including parts of Atlantic Canada and the Prairies, have shown resilience or even declining unemployment. These fault lines underscore that while the national labour market may be stabilizing in aggregate, regional disparities remain significant. Importantly, permanent layoffs nationally have not spiked; rather, it’s taking longer for displaced workers to find new jobs, reflecting a slower churn in hiring. This “softening but not collapsing” theme echoes the view that trade disruptions are a headwind, yet likely to be “contained,” with the unemployment rate peaking at levels slightly above 7.0%”. Tariffs, Growth, and Inflation: Mixed Economic Signals The tariff backdrop that emerged from late 2024 into 2025 weighed on Canada’s economic momentum. Uncertainty around U.S. trade policy prompted businesses to pull back, especially in export-focused sectors. After strong GDP growth in Q1 2025 (when exporters front-loaded shipments to get ahead of anticipated tariffs), the economy likely contracted about 1.5% in Q2 as that temporary export surge reversed. The Bank of Canada noted that U.S. tariffs have disrupted trade flows; a sharp drop in exports and softer U.S. demand for Canadian goods contributed to the second-quarter downturn. Heightened uncertainty also restrained business investment and household spending in recent months. In short, the tariff shock acted like a flash freeze on portions of the economy in the spring. Yet outside of trade-heavy sectors, Canada’s domestic economy has shown pockets of resilience. Consumer-facing industries saw modest growth earlier this year, and housing activity has started to stabilize after a prolonged slowdown. As tariffs took effect, Canadian firms and consumers proved reasonably adaptable: global financial conditions improved modestly (equity markets rose, credit spreads narrowed) and longer-term bond yields ticked up on signs that worst-case economic scenarios were being avoided. For Canada, this means fixed mortgage rates have not fallen much despite the Bank of Canada’s rate cuts earlier in the year; bond markets are pricing in a relatively resilient outlook. The BoC’s July Monetary Policy Report opted not to issue a single GDP forecast but instead mapped out scenarios. In its “current tariff scenario” (reflecting tariffs in place as of July), the Bank projects a return to modest GDP growth (1% annualized) in the second half of 2025 as exports stabilize and consumer spending gradually picks up. Economic slack is expected to persist into 2026, keeping growth below potential for some time, but not spiralling into a severe recession. Inflation dynamics in Canada have improved even amid the trade turmoil. Headline CPI inflation was 1.9% in June, essentially back within the Bank’s 2% target range. Easing price pressures, particularly as earlier interest rate hikes cooled domestic demand and housing costs, has offset some tariff-driven cost increases. The Bank estimates underlying inflation (excluding volatile components and adjusted for tax changes) is about 2.5%, a bit above target but trending down. Tariffs are exerting some upward pressure on prices, especially for affected goods; but weaker economic conditions are counterbalancing this. In fact, under the Bank’s main tariff scenario, these opposing forces roughly cancel out, keeping Canadian inflation near 2% through the forecast horizon. Put simply, softer demand is helping to contain domestic inflation even as import costs rise. This outcome differs from the U.S., where tariffs cover a much broader swath of imports and are starting to nudge consumer prices higher. (Notably, over 75% of U.S. imports face tariffs of at least 10%, compared to less than 10% of Canadian imports, thanks to exemptions under USMCA rules.) Thus, Canada’s inflation outlook is a bit more benign than America’s, giving the Bank of Canada slightly more breathing room on policy. Nonetheless, the tariff cloud is far from cleared. The BoC warns that tariffs are now a “permanent fixture” in the outlook, likely dampening investment and productivity beyond the immediate cycle. Businesses face ongoing costs to reconfigure supply chains and diversify markets, which could still filter through to consumer prices over time. The central bank also modeled alternative scenarios: a de-escalation in trade tensions (average U.S. tariff falling to 10%) would spur a quicker economic rebound for Canada but also pull inflation slightly below target, whereas an escalation (average tariff jumping to 28%) could push Canada into a prolonged recession through early 2026 while lifting inflation above 2.5%. This worst-case “stagflation” scenario underscores why policymakers remain cautious. For now, though, tariffs in place have been “less severe than feared” and largely targeted in scope, leaving the majority of Canadian exports to the U.S. still duty-free under trade agreements. So long as a broader trade war doesn’t materialize, Canada’s economy should manage a slow-growth trajectory with contained inflation. Bank of Canada Outlook: On Hold, But Watching Closely In response to this data, the Bank of Canada has adopted a patient, data-dependent stance. After aggressively tightening policy in 2022-2023 to combat high inflation, the Bank pivoted to easing in late 2024 and through early 2025 delivered a total of 7 rate cuts (a cumulative 2.25 percentage points of reduction) as growth faltered. By March 2025, the overnight rate was brought down to 2.75%, where it has remained since. At its most recent decision (July 30, 2025), the BoC held the policy rate at 2.75% for a third consecutive meeting, opting to assess incoming data before considering any further moves. The tone was notably cautious yet balanced. On one hand, officials acknowledged that Canadian growth has softened since the start of the year, and that excess supply (economic slack) is increasing – classic arguments for easier policy. On the other hand, they pointed out that the economy has proven more resilient than worst-case scenarios envisioned in the spring, and inflation isn’t falling much below target either. A few recent inflation readings surprised slightly to the upside, giving the Bank reason to pause on additional stimulus. The Governing Council also noted that some of the heavy lifting is being done by fiscal policy (e.g., targeted government support for trade-impacted sectors), reducing pressure on monetary policy to respond. From a mortgage market perspective, this likely translates into a period of relative stability in interest rates. The BoC’s earlier cuts are still working their way through the system. With mortgage rates having only stabilized at levels near or above those of 2020–21 originations, the stimulus effect has been modest. For households and borrowers, it feels less like a return to ultra-cheap credit and more like a slight easing off the brake pedal. Fixed mortgage rates, influenced by bond yields, remain elevated by historical standards. Indeed, the recent resilience in the economy has seen longer-term bond yields firm up, rather than fall, in anticipation that no immediate rate relief is needed. Barring a negative surprise, variable mortgage rates linked to the overnight rate should hold steady as well. Lenders and mortgage professionals can thus expect the cost of borrowing to hover around current levels in the coming months. Any shifts will hinge on incoming evidence: a decisive slide in growth or inflation would tilt the Bank toward a cut, whereas signs of re-accelerating inflation (or a robust rebound in jobs) could delay easing further.

Canada’s housing market just got a wake-up call. This week, the Canadian Real Estate Association (CREA) revised its 2025 outlook, forecasting 469,503 home sales—a 3% drop from 2024. That’s a sharp turnaround from the 8% growth they projected in January, and even April’s flat forecast. Behind the shift? High mortgage rates, trade risks, and stubborn inflation—all putting the brakes on buyer demand. Let’s break down what’s happening and what it means for investors and buyers watching the market. Key Highlights: CREA now expects 469,503 home sales in 2025 , down 3% from last year. The five-year Government of Canada bond yield remains above 3% , keeping mortgage rates high. June inflation came in at 1.9% , not low enough to trigger another rate cut. Until core inflation dips and yields fall , mortgage stress tests will continue capping buying power and delaying a full recovery. GTA Data Paints a Stark Picture The slowdown is especially visible in major markets like Toronto. According to Urbanation’s Q2-2025 condo market report: Only 502 new condo units sold , down 69% from last year and a staggering 91% below the 10-year average. Unsold inventory hit a record high with 2,478 move-in ready units—roughly five years of supply. Average asking prices dropped 6% year-over-year to $1,212 per square foot. Nationally, activity is sluggish. Sales rose a modest 2.8% from May and 3.5% from last June, but CREA now expects the average home price to fall 1.7% to roughly $677,000 —about $10,000 lower than its April forecast. Bond Yields and Mortgage Pressure The Bank of Canada paused its rate-cut cycle after its June move, holding the overnight rate at 2.75%. With core inflation still near 3% and new U.S. trade threats emerging, the odds of another cut at the July 30 meeting are low—under 6%, according to market pricing. This matters because fixed mortgage rates follow bond yields . And those remain elevated. Until we see the 5-year bond yield dip below 3% , mortgage costs will stay firm. Worse, the federal stress test still requires borrowers to qualify at 2% above their actual rate , meaning every 25 basis point rise cuts buying power by roughly 3%. Tariff Shock Adds to Uncertainty External shocks aren’t helping. On July 10, former U.S. President Donald Trump announced a 35% tariff on Canadian goods , effective August 1. The move rattled markets and pushed up yields further, as investors demand a premium for long-term risk exposure tied to trade uncertainty. These trade tensions only reinforce a broader theme: rate relief is on hold until inflation and geopolitical risks cool off . What History Tells Us This isn’t the first time housing has paused while waiting for a break on rates. In 2008–09 , the Bank of Canada cut rates by 425 basis points during the global financial crisis. Mortgage rates dropped and sales rebounded within a year. In 2015 , after an oil shock, two rate cuts helped stabilize the market. But in 2022 , surging inflation led to aggressive tightening—raising rates from 0.25% to 4.25% in ten months. The result? 2023 sales plunged nearly 20%. The lesson: Real estate is highly rate-sensitive. When inflation is under control, the Bank can step in to boost demand. But until that day comes, today’s high rates, stress tests, and global risks will keep the recovery in check. Bottom Line CREA’s downgrade confirms what many in the industry have been feeling on the ground: buyers are hesitant, inventory is stacking up, and affordability is still under pressure . If you’re a buyer, seller, or investor, the key takeaway is this: watch inflation and bond yields closely . A shift in either could kick-start a turnaround—but until then, we’re in a holding pattern. Want to talk strategy? Whether you're thinking of investing, buying, or just staying informed, let’s connect and make a plan that works in today's market.