Economic Overview

The change of administration in the United States this past January has created uncertainty for the Canadian, U.S., and global economies in our most recent market update. Trade tariffs remain restrictive, though equity markets in both countries have proven resilient. Global tensions involving the U.S., China, Russia, and the Middle East continue to contribute to instability.

While politics influence financial markets, our outlook remains guided by data, bond markets, and broader economic fundamentals rather than political events.

Interest Rates

Economists and market participants widely expect the Bank of Canada to cut its overnight policy rate by 25 basis points on October 29, reducing it from 2.50% to 2.25%. The move would reflect weak business sentiment, sluggish sales, and tariff-related pressures.

However, hotter-than-expected inflation (2.4% in September) and a strong labour rebound have softened confidence in a cut—odds now sit near 77%, down from earlier forecasts above 80%. The Bank continues to emphasize a data-dependent approach, suggesting it could pause if inflation or employment remain strong.

In the U.S., Federal Reserve Chair Jerome Powell has also indicated further cuts amid a slowing economy. The combined easing trend could support borrowing and mortgage activity in late 2025.

Housing Market

Economic uncertainty and cooling consumer confidence have softened housing demand nationwide. Ontario continues to experience rising listings and inventories, which are keeping price growth modest.

According to RBC Economics, national resales fell 1.7% in September, marking the first decline since April. Sales slipped in Vancouver, Calgary, and Ottawa but rose slightly in Toronto, Winnipeg, and Quebec City. Prices remain soft in Ontario and B.C., while the Prairies, Quebec, and Atlantic Canada show modest gains where supply is limited.

National housing starts reached 279,234 units in September, up from 244,543 in August, though roughly 15,000 new homes remain unoccupied. The average home price in Canada now sits below $690,000, down from the 2022 peak of $837,400.

The preconstruction condo market has cooled sharply, stalling many new projects as financing tightens. While affordability has improved slightly, mortgage payments still take up a large portion of income in major cities. Ottawa’s $13-billion Build Canada Homes program aims to boost construction and reduce fees, but details remain unclear.

Purpose-Built Rentals

Developers of new purpose-built rentals (PBRs), particularly in the Greater Toronto and Hamilton Area, are facing extended lease-up periods as demand eases and supply expands. Rents declined 3.2% nationwide and 2.4% in Toronto, although PBRs remain costlier than condos or older apartments due to high land and construction costs.

Landlords are using incentives—like one- or two-months’ free rent or cash bonuses—to attract tenants. Longer-term perks such as free parking or storage have proven more effective. Over 200,000 new rental projects remain stalled as developers await improved market conditions.

Student Housing

The federal government’s 35% cap on international student permits has reshaped the student housing market. Formerly full residences, like Granville Hall in Halifax, now face vacancies, halting expansion plans across provinces.

The cuts have been most significant in Ontario (27%), Nova Scotia (22%), and P.E.I. (26%), where international students had driven rental demand. In college towns such as Waterloo, London, Hamilton, and Kingston, rents have fallen 5%–11%, forcing landlords to reduce prices and accept shorter leases. Many small investors who bought properties during the pandemic are struggling with higher mortgage costs and lower rental income.

By contrast, institutional operators such as Forum Asset Management and Global Education Communities Corp. maintain over 90% occupancy and continue expansion in major university centres including Toronto, Ottawa, and Vancouver.

First-Time Home Buyers

This year, many first-time buyers purchased homes between $350,000 and $550,000 in rural and small-town Ontario, often using Purchase-Plus-Improvements programs for renovations.

For younger Canadians, however, homeownership remains difficult. A TD Bank survey found 53% of Gen Z feel pressure to appear financially stable despite mounting debt, while 47% cite cost of living as their main obstacle. Only 19% list homeownership as a top goal, yet disciplined savers are finding opportunities in smaller, more affordable communities.

At Buckley Mortgage, we’re all about making things simple for you. We specialize in New Home Buyers, Purchase Plus Improvement and New Home Construction Mortgages to help homeowners buy the property they can afford. Here’s how we’ve got your back:

• Understanding Your Situation: We’ll take a close look at your financial picture to find the best mortgage refinancing option for you.
• Finding Great Rates: With access to a variety of lenders, we’ll hunt down competitive rates and mortgage options that could save you money.
• Guiding You Through It: We’ll handle the nitty-gritty details and educate you along the way so you can feel confident in planning your financial future.