Bank of Canada Holds Steady

The recent rebound in core inflation and improved timely activity indicators prompted the Bank of Canada to keep rates on hold at 2.75% on Wednesday. Policymakers will also want to wait for more clarity on future trade relations with the US. We still expect easing to resume soon, though two cuts this year is beginning to look less likely. 

“If a weakening economy puts further downward pressure on inflation … there may be a need for a reduction in the policy interest rate.” 
—BoC Statement, July 30, 2025 

The announcement has made made its intentions more transparent. At this point, it’s leaning towards keeping rates steady or gently lowering them later. 

“Canada is not strong enough to cheer, not weak enough to cut,” said TD economist Maria Solovieva. Her read of the latest Bank of Canada business and consumer surveys suggests that confidence has deteriorated again in recent months, after showing signs of recovery late last year. 

What’s keeping the Bank on hold, despite soft demand, is inflation. Core measures, particularly trimmed mean and weighted median CPI, remain above 3%, and services inflation is proving stubborn. Scotiabank’s Derek Holt argues the Bank is “still fighting the last inflation fight,” 

Here’s how implied probabilities for September are forecasted:

For the Bank of Canada meeting on September 17: 

• 25 bps cut: 15% chance 
• No change: 85% chance 

For the Federal Reserve meeting on September 17: 

• 25 bps cut: 45% chance 
• No change: 55% chance 

Tariff Updates

Prime Minister Mark Carney said on Monday that trade negotiations between Canada and the United States are intense, stressing a fully tariff-free deal is improbable.

On Thursday, Trump signed an order lifting his tariff on Canadian imports from 25% to 35% (CUSMA goods are still exempted).

First National Sells Controlling Stake

In a 2.9 billion dollar deal, First National, one of Canada’s biggest non-big 5 lender is selling its controlling stake to Global alternative asset manager Brookfield Asset Management Ltd., and private equity firm Birch Hill Equity Partners Management Inc. 

First National’s stock closed Friday at $42.48 and gapped open Friday AM to over $48 a share. The $48/share deal price is below the 2021 all-time high of $50.15 

June Housing Numbers

The 2.8% m/m rise in home sales in June builds on the 3.5% gain in May. Together, they hint at a more sustained pick-up in demand after a tariff-induced weak start to the year, with the recovery led by a cumulative 17% jump since April in sales in the Greater Toronto Area. Meanwhile, new listings fell by 2.9% m/m in June but remained elevated.

Rents

However, rents continued to fall across much of the country in June. Falling immigration over the coming months should drive rents lower still, especially in the largest cities, which tend to attract the most migrants.

Variable vs Fixed

Floating-rate market share at chartered banks slid from a relative high of 43% in March to 32% in May.

Big 5 Bank Outlook on B.O.C

New Bank of Canada rate forecasts are in: 

• RBC expects no more cuts holding at 2.75% through 2026, the most hawkish outlook. 
• Scotiabank revises its call lower to 2.50% (from 2.75%). 
• BMO Financial Group remains the most dovish, forecasting 2.00% by early 2026. 
• TD, CIBC & National Bank all see a 2.25% terminal rate 
• Capital Economics is calling for 2 more cuts this calendar year

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.44%
• 3 year fixed, 30 yr amortization – 4.39%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.09%
• 5 year variable, up to 30 amortization – Prime – 0.75% = 4.20%

Fast Facts

• $103,172,872 – Amount Canadians have collectively lost to crypto investment scams so far this year, per the Canadian Anti-Fraud Centre. They are the top type of investment scam. 
• 87,543 – Challenges filed by Canadians to CRA assessments of their tax filings last fiscal year, a 35% increase from 2023. Taxpayers have historically been right in two-thirds of objections. 
• 84,371 – Loonie hot dogs that were eaten at the Toronto Blue Jays game on Tuesday night, setting a new record for the stadium. The sold-out crowd certainly came to eat. 
• $1.1 billion – What the federal government has spent on housing asylum seekers in hotels since 2017. Ottawa’s currently footing the hotel bills for 500 asylum seekers.  

Factors Influencing Rate Decisions

Economic Growth

• The economy is facing a period of weak growth as US tariffs and uncertainty over the future of the USMCA weigh on exports and investments.
• Uncertainty = Limited Investment
• Forecast of weak GDP growth moving forward – just 1% annualized for 2025

Activity and Employment

• Weakness in the rental market is likely to weigh on residential investment. Muted hiring in those sectors means employment is set to stagnate for the next few quarters, with the unemployment rate rising to an estimated peak of 7.3%.

Inflation

• The scrapping of the carbon tax means headline inflation should remain within the Bank’s 1% to 3% target range. Core inflation is set to be high, near 3%. The big difference with the post-pandemic experience is that demand will be much weaker.

Job Data Exceeds Expectations

• Job creation: +83k (est. +2k | prior +9k)
• Unemployment: 6.9% (est. 7.1% | prior 6.9%)
• Hourly wages: 3.2% (prior 3.5%)
•  

This was 2025’s largest job tally to date. 70k of the gains were part-time (many summer jobs). Having a pay cheque, even a small one, is still better than the alternative.

Private sector (+47k), factory work (+11k) and full-time jobs for those aged 25+ (+9k) were all positive. Moreover, age 25-54 employment was +90.6k, a new record if you exclude the COVID rebound.
​ ​ ​

The 83,000 increase in employment in June marks the largest gain since December last year.

Canadian Inflation

• Headline (y/y): 1.9% (est. 1.9% | prior 1.7%)
• Headline (m/m): 0.1% (est. 0.1% | prior 0.6%)
• Average core (y/y): 3.05% (est. 3.00% | prior 3.00%)
• Breadth (% of basket over 3%): 39.1% (prior 37.3%)

USA Inflation

• Headline (y/y): 2.7% (est. 2.6% | prior 2.3%)
• Headline (m/m): 0.3% (est. 0.3% | prior 0.1%)
• Core (y/y): 2.9% (est. 2.9% | prior 2.8%)

Rates

The above employment numbers above shaved 15 percentage points off BoC cut probabilities.

Underlying inflation is also too strong for July cut and September in now in question as well.

Here’s where the bets now stand:

• For the Bank of Canada meeting on July 30:
  • 25 bps cut: 16% chance
  • No change: 84% chance
  •  
• For the Federal Reserve meeting on July 30:
  • 25 bps cut: 7% chance
  • No change: 93% chance

Fixed rates may also trickle up with rise in the 5 year bond yields. We are now at the highest point since Jan of 2025.

CMHC Boosts Rental Supply

In 2024, CMHC held $213 billion in insurance on multi-unit apartment buildings, up from $168 billion the year prior. Meanwhile, insurance on single-family homeowners fell to $162 billion.

For the first time in its history, CMHC’s book is led not by the dream of ownership, but by the machinery of rent.

Follow the money and the picture sharpens further. CMHC collected $1.67 billion in premiums and fees from the multifamily segment alone, a 73% jump year over year.

Rental underwriting is now the single largest driver of the agency’s insurance revenue.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.30%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.09%
• 5 year variable, up to 30 amortization – Prime – .75% = 4.20%

Fast Facts

• 2.1% – The cap Ontario has put on rent increases in 2026, following three consecutive years where the guideline was held at 2.5%.
• 31,600 – The number of active listings in the GTA by the end of June, marking a near quarter-century high.
• $6 billion – Revenue that exporting 30 million tonnes of LNG per year would generate for the provincial and federal governments, according to a Natural Resources Canada estimate.
• 106,134 – People who permanently left Canada last year, a 10-year high and up from 68,945 in 2015. Some tax experts are concerned about an exodus of wealthy people from the country.

May Housing Rebound

The rise in home sales in May suggests a recovery is underway in the housing market following a tariff-induced shock.

The 3.6% m/m rise in home sales in May marks the first consecutive month of demand growth in over half a year, after sales edged up in April.

The National Average Home Price also increased +1.70% month over month, while still down -1.80% year over year.

Regarding inventory, National resales dropped to 4.88 months. This is down from April’s nearly five-year peak.

That’s in line with the average given the 20-year mean is 4.87 months.

CPI Data

Headline inflation remained at 1.7% in May, its second month below target, albeit largely due to the removal of the carbon tax in April. Stripping out energy, CPI inflation eased to 2.7%, from 2.9%.

Core inflation is heading in the right direction, with the 12-month and 3-month core measures sliding back to 3.0% – the ceiling of the Bank of Canada’s target.

Summary of Deliberations

The Summary of Deliberations from the Bank of Canada’s June policy meeting was released last Tuesday. It revealed the BOC held rates for three reasons.

1. The economy had slowed but not significantly
2. Uncertainty remained high
3. Recent inflation data had firmed.

These communications suggest the Bank is growing increasingly concerned about stubbornly high core inflation, with Macklem also warning “we can’t let a tariff problem become an inflation problem”.

Elevated core inflation appears to be presenting a more significant obstacle to further policy loosening.

Key data released between now and then – including May and June CPI reports and a range of activity indicators including the hope a new Canada–US trade deal could be in place, with Prime Minister Mark Carney pushing for a deal to be reached within the next 30 days

Here’s how market-driven probabilities for the next meetings are lining up:

• For the Bank of Canada meeting on July 30:
  • 25 bps cut: 33% chance
  • No change: 67% chance
  •  
• For the Federal Reserve meeting on July 30:
  • 25 bps cut: 19% chance
  • No change: 81% chance

Insured Mortgage Data

First-time-buyer types are making use of the Finance Department’s new guidelines. The share of insured mortgages that had 30-year amortizations soared to 37.4% in the first quarter, from 3.5% in Q4.

Meanwhile, hiking the insured loan property value cap to $1.5 million didn’t spark much of an increase in activity. Only 1 in 50 CMHC deals was for a home priced over $1 million in Q1.

Having said this, our office has noticed an uptick in insured purchases in areas such as Etobicoke and Leslieville where many freehold homes are priced between $1,000,000 and $1,499,999.

Employment Insurance (E.I)

A troubling data set; 520,000 Canadian’s are now receiving EI.

This is up 12.70% from just 1 year ago.

Canada’s Zero Population Growth in Q1

From January 1 to April 1, the population grew by just 20,107 people (+0.0%), reaching 41,548,787, according to new estimates from Statistics Canada.

That’s the slowest quarterly pace of growth since the early pandemic days and the second-weakest in nearly 80 years of record-keeping.

The slowdown reflects the federal government’s efforts to reduce both temporary and permanent immigration.

The number of non-permanent residents fell by over 61,000 in the quarter, led by a sharp drop in international student permit holders, particularly in Ontario and British Columbia. Stats Can noted that this reduction “is counter to the typical seasonal pattern of an increase in the first quarter.”

Ontario Place Renderings

The Ontario Government released final designs for the revitalization of the long-neglected Ontario Place, alongside a press release outlining the extensive redevelopment plans envisioned for one of Toronto’s most-prized strips of waterfront.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.04%
• 5 year variable, up to 30 amortization – Prime – .75% = 4.20%

Fast Facts

• 4,8000,000 – New homes that Canada will need to build over the next 10 years to restore 2019 affordability levels, per a new report. Home building rates will need to double to meet that demand.
• US$1,760 – How much more U.S. buyers are expected to pay for new vehicles thanks to auto tariffs. Automakers are likely to pass 80% of the $30 billion tariff bill onto buyers.
• 50% – Decline in new graduate hiring by Big Tech since 2019, according to a recent Signal Fire report. Some experts have pointed to AI replacing entry-level jobs as a top contributor.
• US $28,000,000 – Sponsorship money that Cooper Flagg, who was picked #1 by the Dallas Mavericks in the NBA Draft, reportedly made as a college athlete last year at Duke.

GST Rebates for First Time Buyers

Starting June 5th, The Liberal government has finalized the legislation to eliminate the GST portion on new home sales of up to $1 million. This applied to first-time home buyers. This will equate to as much as $50,000 off the cost of a new build.

The new policy takes a big step beyond the existing New Housing Rebate, which is open to more than just first-time buyers, however; has long been capped at homes priced up to $450,000.

Roughly 92% of new builds in Toronto are expected to qualify for a full or partial tax relief for homes priced up to $1.5 million. 75% of new units in Vancouver would qualify.

May Employment Numbers

The labour market continues to struggle.

The 8,800 rise in employment in May was better than the consensus but still means the labour market is yet to fully reverse March’s 32,600 drop off. The largest rise came from wholesale and retail trade, where employment increased by 43,000. This may reflect a boost to demand for domestic businesses amid tariffs, as well as the return of students to the labour market ahead of the summer period.

The flip side of these tariff effects was a 12,000 fall in employment in the manufacturing sector, as well as a 16,000 decline in transportation and warehousing employment.

The largest drag came from a 32,000 decline in public administration employment, reversing the similarly-sized boost in April from the federal election.

Positively, the number of employees in the private sector rose, on net, by 61,000 – the first rise since January.

Toronto Employment Numbers

More locally, Toronto’s unemployment rate hit 9% in May.

Outside of COVID, that’s the highest since 2012.

Toronto Pre-Construction

Toronto pre-construction sales continue to reach crisis level.

The months of inventory for pre-construction condo’s in Quarter 1 were more than 14X higher than that of 2022.

It will now take a staggering 58 months to sell the available stock at the current rate of sales.

Cash Flows Slow Rental Purchases

“During the low-rate era, investors could overlook some negative cash flow because equity was still getting built up below the surface – that no longer applies. Until cash flow dynamics improve (and we’re not there yet), the investor will remain absent from the market,” BMO Economics reports.

For our office, the only rental files we are completing are well outside of the GTA core (North Bay, Pembrooke, Sudbury, Hamilton, etc).

Rate Odds For July

Update rate odds for next month are below:

• For the Bank of Canada meeting on July 30:
  • 25 bps cut: 36% chance
  • No change: 64% chance
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 3% chance
  • No change: 97% chance

Equifax Reporting on Mortgages

The numbers below are based on the average’s across Canada. GTA balances would clearly be much higher than the below.

• $271,000: The average mortgage balance per mortgage account.
• $354,400: The average mortgage origination amount. Originations are logged as first-time home buyers, repeat buyers, renewals, and refinancers.
• 28% – The share of existing borrowers who switched lenders in Q1.
• $134,200 – The average increase in loan balance (per mortgage) for estimated refinances.

Canada Increases Defence Spending

Prime Minister Mark Carney announced on Monday that the Department of National Defence would receive an additional $9.2 billon (0.4% of GDP) this fiscal year, raising total defence spending to NATO’s 2% of GDP target.

This is five years ahead of the timeframe laid out in the Liberals’ election platform, reflecting the pressure on the new government to prepare the country for life in a world absent of an implicit US military guarantee.

Gen Z Spends

According to TransUnion, Gen Z consumers debt in Canada hit $2.5 trillion in Q1. This is a staggering 30.6% year-over-year increase in outstanding credit balances.

Meanwhile, newcomers to Canada accounted for $2.6 billion in new credit balances, at a 6.3% yearly increase.

Manufacturing Numbers Begin to Drag

Data released on Friday showed manufacturing sales volumes fell by 2.8% m/m in April. Motor vehicle sales plunged (-8.3% m/m), with the sector’s demand woes compounded by shutdowns at assembly plants in Ontario. Primary metal sales also dropped sharply (-4.4% m/m) in response to US steel and aluminum tariffs.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.04%
• 5 year variable, up to 30 amortization – Prime – .75% = 4.20%

Fast Facts

• 1,600 – Beers that were entered into the 2025 Canadian Brewing Awards, Canada’s oldest beer competition. Godspeed Brewery in Toronto captured Best in Show for its “Irori” lager.
• 49,300 – Refugees Canada welcomed last year, making it the second-largest resettlement country in the world. Canada led the world in permanent residency granted to refugees.
• US $22 billion – Revenue that the U.S. government collected from duties last month, driven by the Trump administration’s tariffs. Revenue was up 42% from April.
• 12% –  The total amount Canadian rents have increased since 2022, despite falling year over year in May.

Bank of Canada Pauses

The Bank of Canada is juggling with unemployment risk on one side and inflation risk on the other. Wednesday, the Bank tried its best to keep a balance by holding its policy rate at 2.75%. Prime rate remains at 4.95%.

Current markets are pricing in a 45% chance of a cut at the next meeting (July 30^th). Before this meeting we will see 2 inflation reports and 2 employment reports. If unemployment ticks above 7%, this will help the chance of another rate cut. With immigration remaining strong, unemployment will continue to rise. Capital Economics is projecting an unemployment rate of 7.50% at its peak.

The Bank’s communications alluded to elevated underlying inflation, as well as the fact that “recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs.” In other words, the Bank still wants additional time to assess whether tariff-related cost increases will lead to persistent inflation.

Active Listings Continue to Rise

May’s sales were down 13.3% compared to the 7,206 sales recorded in May 2024, highlighting how trade uncertainty has weighed on the market. Sales were also up 11.7% compared to the 5,585 sales recorded in April 2025. “This was the second monthly increase in a row,” said TRREB.

TRREB also reported that there were 21,819 new listings in the month, marking a 14% rise over last May’s level and a 15.8% increase month over month. New listings were higher than they’ve been since March 2021, when there were 22,709 reported.

The real surge in the May report was active listings, with a staggering 30,964 on the market at the end of May, representing a 41.5% increase year over year and a 13% rise month over month.

Mortgage Volumes

Lenders are starting to see increased mortgage volumes, all be it, still historically low in comparison.

Canadian GDP

Headline GDP showed modest growth rising 2.20% annually in Q1 (estimate was 1.70%)

Oxford Economics wrote after the report: “We think Canada’s economy has slipped into a trade war-induced recession that will last through the end of 2025.”

With tariff impacts still not realized, these numbers will continue shift throughout the calendar year.

US Core Inflation

A four year low, US core inflation is sitting at 2.5% y/y. This is down 0.20%.

Tariffs impacts moving forward will continue to impact the readings.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.04%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 92% – Share of royalties earned by Canadian artists onSpotify in 2024 that came from listeners outside of Canada. Listeners stream 15million hours of Canadian music every day.

Tariff Appeal

A series of court rulings has thrown Donald Trump’s global trade war into legal battles.

The US CIT has ruled that “the Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs”.

That means the baseline 10% tariff, the reciprocal tariffs scheduled to take effect after the 90-day pause, the 20% fentanyl-related tariffs on China and the 25% fentanyl tariffs on non-USMCA compliant imports from Canada and Mexico are void.

What happens once the Trump administration appeals the ruling?

The case would first be taken up by the US Federal Court of Appeals and, if the administration loses that appeal, then potentially go to the Supreme Court.

Market Returns

May proved to be a “bounce-back” month after a negative, tariff-related sell off in April. Trump’s tariff announcements continued to dominate headlines this month and volatility did remain high.

Big Bank Reporting

Banks have released some feedback from what they saw in Q2 of this year. Slow purchase volume has caused banks to focus on renewal and switch in business.

Notable quotes from each bank are below.

• RBC – “Residential mortgage growth was largely supported by stronger client renewals and higher origination volumes driven by strong mortgage switch-in activity, partly offset by higher pay downs.”
• TD – “You see a flat average sequential growth on a spot basis, we’re actually up $1 billion quarter-over-quarter. So the growth is there. The profile was a little different this quarter where we had higher pay downs in January and February, but then we exited the quarter with momentum.”
• Scotiabank – “We had solid year-on-year growth – 6% and quarterly growth of 1% … We’re seeing the purchase volume coming down … and more switches.”
• BMO – “Overall on RESL, if I think about quarter-over-quarter we’re about 1% up and year-over-year we’re 6%. So we’re seeing some strong growth.”
• CIBC – “In our mortgage portfolio, there was a slight increase in ninety-plus-day delinquencies. We do not expect meaningful losses given the strong average loan-to-value in the book.”

NDP Party Status

NDP won’t get official party status.

Government House leader Steven MacKinnon said the NDP won’t be granted official party status, meaning the party won’t be guaranteed the power to ask questions during question period, hold committee seats, or receive the financial support given to official parties.

The NDP won seven seats in the last election, below the 12-seat threshold needed to secure official party status.

Policy Probabilities

Here’s how the market-implied next-meeting odds closed the week. The next B.O.C announcement is next week.

• For the Bank of Canada meeting on June 4:
  • 25 bps cut: 23% chance
  • No change: 77% chance
  •  
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 2% chance
  • No change: 98% chance

Inventory Surges

The latest data shows there are more than 16,000 homes listed for sale in Metro Vancouver (up 29.7% from last April)

In the GTA, there are 27,000 listings (up 54%).

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.35%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.04%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 8,347 – Hudson’s Bay employees who will be let go by June 1, accounting for 89% of the company’s total workforce. All remaining stores will also be closed by that date.

Canadian Headline Inflation

Headline inflation dropped to well under expectations. However, without the carbon tax adjustment, we’d be looking at something closer to 2.5%.

• Year-over-year: 1.74% (est. 1.6% | prior 2.3%)
• Month-over-month: -0.1% (est. -0.2% | prior 0.3%)

Canadian Core Inflation

The trouble lies with Core Inflation. Strip away the volatile data, and underlying inflation grew more concerning.

• Year-over-year: 3.15% (est. 2.9% | prior 2.85%)
• 3-month annualized rate: 3.60%

These new data sets do not provide immediate relief for borrowers. Yields are surging, and rate cut odds are fading. “After a weak jobs report handed the Bank a good reason to cut, this back-up in core above 3% pretty much washes that away,” BMO Economics reported.

US Inflation Undershoots Expectations

The tariff wars aren’t blowing up U.S. prices just yet, at least not based on April’s official data. But economists are bracing for impact.

This report gives the Fed no compelling reason to alter its current stance.

• CPI m/m: 0.2% (est. 0.3% | prior -0.1%)
• CPI y/y: 2.3% (est. 2.4% | prior 2.4%)
• Core CPI m/m: 0.2% (est. 0.3% | prior 0.1%)
• Core CPI y/y: 2.8% (est. 2.8% | prior 2.8%)

Policy Odds For June

Tuesday’s inflation numbers have altered the chances of a June BoC cut.

New implied odds are below:

• For the Bank of Canada meeting on June 4:
  • 25 bps cut: 31% chance
  • No change: 69% chance
  •  
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 5% chance
  • No change: 95% chance

Trade War Slows Real Estate

Fresh CREA figures confirm that Canada’s housing sector is once again an innocent bystander in a geopolitical fight, this time its courtesy of Trump’s tariff war.

• Sales: -7.5% y/y (17% below the 10-year average)
• Average price: $679,866 (+0.2% m/m and -3.9% y/y)
• Benchmark price: $689,200 (-1.2% m/m and -3.4% y/y)
• Inventory: 5.06 months (10-year average: 4.15 months)

Challenges in Down Payment

It now takes 6 years to save for a 20% down payment on the average home, says Desjardins Economics. The bad news is, it requires saving 20% of one’s disposable income.

Unemployment in Young Canadians

Young Canadians are struggling to find work in what’s become the worst summer job market in over two decades. According to new data from Indeed, job postings in early May were down 22% from last year.

Last month, the unemployment rate for Canadians aged 15 to 24 surpassed 14%. For recent grads, it hit 11.2% in the first three months of 2025 — the highest rate in over 20 years outside of the pandemic.

Moody Cuts US Credit Rating

For the first time since it started rating U.S. bonds in 1993, debt rating agency Moody’s has dropped the country below AAA. The move matches the credit ratings of S&P and Fitch.

The American government’s debt is a growing concern.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.59%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.49%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.14%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 6 – The number of years it would take to save a 20% down payment for an average-priced home in Canada, assuming average income and 20% put aside for the payment.
• $187,800,000- How much Members of Parliament spent last year on expenses, a record high. MPs spent around $114,000,000 on staff salaries and $32,000,000 on travel.
• $136,000,000- Credit losses that buy-now-pay-later company Klarna reported last quarter, asign that more consumers are failing to pay back the loans on time.
• 2,000 – Roughly how many employees TD is laying off, equivalent to 2% of its workforce. The layoffs come as the bank restructures following its record anti-money laundering settlement.

Weekly Digest

June Bank of Canada Meeting

The Bank of Canada is likely to resume cutting next month. Friday’s dim jobs report has brightened prospects the Bank of Canada to reduce rates again.

Although the Bank kept interest rates unchanged at 2.75% last month, the Summary of Deliberations from that meeting suggests that the Bank is still leaning toward further rate cuts.

Here’s how the market-implied next-meeting odds:

• For the Bank of Canada meeting on June 4:
  • 25 bps cut: 66% chance
  • No change: 34% chance
• For the Federal Reserve meeting on June 18:
  • 25 bps cut: 17% chance
  • No change: 83% chance

Bond Yields

Fixed rates have been flat, as evidence of the bond yields. With no major changes since the election, or Carny & Trumps first face to face meeting, lenders are holding fixed rates steady.

Over the last month we have only seen about 0.20% of variation, which is not enough for lenders to raise or drop fixed rates.

US Fed Announcement

It was another neutral decision – the Fed’s version of ‘do no harm’ amid doubt on Trump’s trade policy.

“Uncertainty about the economic outlook has increased further,” the Fed said in its statement. “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen [compared to March].”

Carney’s Priorities

Carney’s first post-election press conference on Friday came 4 days after a minority government victory. His key points were:

1.    Building up Canadian resilience. He vowed to fight for the “best deal” possible during his meeting with Trump.

2.    New cabinet, new Parliament. Introduction of a new cabinet has been announced. Parliament will resume on May 26^th. He said he has no plans to form a governing pact with the NDP.

3.    Cost of living measures. Carney has vowed to swiftly institute new tax measures and to ramp up home construction across the country.

4.    National Security Spending. Carney promised to hire a thousand more Canada Border Services Agency officers and to bring in another thousand RCMP officers to shore up law enforcement. He promised to toughen up bail laws for anyone charged with stealing cars, home invasion, human trafficking or smuggling.

5.    Immigration cap. Carney said his government will return immigration to “sustainable levels” by capping temporary workers and international students at 5 per cent of the total population by 2028. Carney has criticized the Trudeau government for letting immigration surge after the pandemic at what he called a rapid and unsustainable level.

Carney Meets Donald Trump

• Trump stated he has “a lot of respect” for Carney and wants “to be friends” with Canada. “We love Canada”.
• Trump stated that he’d “love” to sign a new trade deal with Canada.
• Carney addressed one of the largest elephants in the room, telling the President in front of reporters that Canada will “never be for sale.” Trump seemed to take it well.
• Trump said he would not walk away from the United States–Mexico–Canada Agreement (USMCA) trade deal, adding that it was a “great” deal. He wants to see “subtle changes” to it, however.
• “We always will” protect Canada, Trump pledged.
• Carney characterized today’s discussions as “constructive” and “concrete,” whereby the U.S. was looking for “solutions.”
• The PM said more talks are planned for the weeks ahead.
• Carney and Trump will meet face-to-face next at the G7 Summit in Alberta this June.

US Employment Figures

Unemployment remained at 4.20% with job growth of 177,000. These data sets give no reason for the Fed to accelerate rate cuts moving forward.

Canadian Unemployment

The gap between Canadian and U.S. unemployment is widening.

• Job change: +7,400 (est. +2,500 | prior -32,600)
• Unemployment: 6.9% (est. 6.8% | prior 6.7%)
• Wages (permanent employees): +3.5% y/y (est. +3.3% | prior +3.5%)

31,000 manufacturing jobs disappeared, at least temporarily. We may see lenders continue risk mitigation alerts, scanning mortgage applications for borrowers who could be impacted by further layoffs.

US Strikes a Deal with the U.K

The U.S. and the U.K. agreed on a framework for a deal lessening U.S. tariffs. It would drop tariffs on U.K. vehicle exports to 10% from 27.5%, and erase the 25%tariffs on steel and aluminum. However, the baseline 10% tariff on most U.K. goods will remain.

In exchange, the U.K. will allow more beef and ethanol imports from the U.S. and will work to streamline the processing of U.S. goods through customs.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.39%
• 3 year fixed, 30 yr amortization – 4.59%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.49%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.14%
• 5 year variable, up to 30 amortization – Prime – .70% = 4.25%

Fast Facts

• 14% – Share of the average Canadian’s monthly income that goes toward car expenses.  Car ownership costs have jumped 9% to $5,497 annually compared to last year.
• 395,000 – Permanent resident spots available in Canada this year. The scarcity of spots has led some of the 3 million temporary residents to learn French to boost their odds of gaining PR.
• $20.9 billion – Total price tag of Canada’s small modular reactor project in Ontario. The province approved plans to begin building the nuclear reactors, the first of their kind in any G7 country.

Weekly Digest

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April 14th, 2025 – April 20th, 2025

Current Interest Rates