THE BANK OF CANADA SAYS FEDERAL SPENDING ISN’T DRIVING INFLATION YET, BUT GROWTH IS SLOWING
Bank of Canada Governor Tiff Macklem told Parliament’s Standing Committee on Finance this week that federal spending has not yet interfered with the Bank’s work on inflation. The federal budget projects a shortfall of roughly 2% of GDP. Macklem said the key question is whether that spending boosts the economy only in the short term or builds its capacity to grow. BMO Chief Economist Doug Porter sees it differently, saying monetary and fiscal policy are working at cross purposes.
The testimony came days after the Bank raised its overnight rate to 2.50% on October 28, and the growth data since has been soft. Statistics Canada reported that GDP was flat in August, and its early guidance for September points to a 0.1% contraction. Third quarter growth is tracking around 1.3% annualized, below the Bank of Canada’s 2.0% projection. Money markets are pricing a hold at the December 9 decision, with a possible quarter-point increase in January 2027.
What this means for your mortgage: The overnight rate is 2.50% for now. If the Bank holds in December, prime-linked payments stay where they are. Fixed rates follow bond yields rather than the overnight rate directly, so a slowing economy and rising yields are pulling in different directions. Some economists note that another increase is still possible if growth and inflation data come in firmer than expected.
GTA HOME SALES FALL 7.9% IN OCTOBER
The Toronto Regional Real Estate Board (TRREB) reported 5,603 home sales in the GTA in October, down 7.9% from a year earlier. The average selling price was $1,024,108, down 2.7%, and the MLS HPI Composite benchmark price is down 4.3% year over year. New listings fell 11.9% to 14,173, and active listings fell 10.0% to 25,098. That works out to 4.6 months of inventory.
By area, sales in the City of Toronto were 2,184 (down 6.3%) and sales in the rest of the GTA were 3,419 (down 8.9%). By property type, townhouse sales fell 11.0%, condo apartment sales fell 10.4%, semi-detached sales fell 8.1% and detached sales fell 4.4%. The average condo apartment price was $621,400 and the average detached price was $1,310,627. On a seasonally adjusted basis, sales were up 1.2% from September.
TRREB President Daniel Steinfeld said a Canada-U.S. trade deal could give GTA residents a clearer view of the economic outlook and help renew interest in home ownership heading into 2027. TRREB Chief Information Officer Jason Mercer noted that lower selling prices have reduced the effect of higher interest rates on monthly mortgage payments.
What this means for your mortgage: A lower price lowers the mortgage needed for a given purchase, but a higher rate pushes the payment the other way. The monthly payment is the number to watch, not the price alone. Brokers are also noting that appraisals coming in below the purchase price remain a hurdle on some condo files, which can mean bringing more cash to closing.
FOREIGN BUYER BAN EXTENDED TO 2029, WITH AN EXEMPTION FOR NEW BUILDS
The federal budget extends the ban on non-resident purchases of residential property by two years, to January 1, 2029. It also adds a new exemption that allows foreign buyers to purchase newly constructed residential properties. The ban was first enacted in 2023, and polling cited in coverage of the budget indicates 76% public support. National Bank of Canada Chief Economist Stéphane Marion has criticized broader restrictions, asking how Canada can present itself as a standout investment destination while telling foreign buyers they cannot touch the residential market.
The government’s stated aim is to protect resale affordability for domestic buyers while directing international capital into new construction.
What this means for your mortgage: Nothing changes for domestic buyers’ qualification or rates. The new-build exemption matters most for Toronto presale condo projects, which need buyer commitments to reach the presale thresholds that lenders require for construction financing. A wider pool of eligible buyers can help projects reach those thresholds. Resale homes remain closed to foreign buyers.
WHERE THINGS STAND
Variable-rate holders are watching a December 9 decision that markets expect to be a hold. Fixed-rate holders and renewers are dealing with a slowing economy that is pulling in the opposite direction from rising yields. And GTA buyers are facing fewer listings and softer prices, which gives them more room to negotiate.
Call or text 249-480-1249. HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources: Canadian Mortgage Trends / Bloomberg, “Bank of Canada says fiscal policy isn’t stoking inflation yet,” November 3, 2026; Canadian Mortgage Professional, “Canada’s GDP stalls, clouding Bank of Canada’s December call,” October 30, 2026; Canadian Mortgage Trends / The Canadian Press, “Greater Toronto Area home sales down nearly 8% in October: real estate board,” November 4, 2026; Canadian Mortgage Professional, “GTA home sales stumble in October as buyers seek economic clarity,” November 4, 2026; Canadian Mortgage Professional, “Canadian government to extend – but loosen – foreign homebuyer ban,” November 5, 2026; Canadian Mortgage Trends / Bloomberg, “Federal budget relaxes foreign buyer ban, includes billions for housing,” November 5, 2026; Statistics Canada; Toronto Regional Real Estate Board (TRREB).