The Canadian housing market is constantly evolving, and this week brings some notable shifts that every homeowner and aspiring buyer should be aware of. We’re seeing changes in interest rate forecasts, improvements in affordability in certain areas, and even new dynamics emerging from population growth.
Here’s your Mortgage Minute for July 4, 2025:
Interest Rate Outlook and Economic Signals
Expert opinions on Bank of Canada interest rate cuts are shifting, with many now backing away from predictions of further reductions to interest rates this year [1]. What’s interesting is that while our Bank of Canada is holding steady, US economic data shows contraction in Q1 2025 GDP, falling corporate profits, and rising jobless claims [2]. This indicates a challenging economic environment south of the border that could still influence Canadian interest rate decisions [2]. Both central banks are scheduled to meet on July 30th [1, 2].
Canadian Housing Market Trends
There’s some good news on the affordability front: homeownership costs in Canada have fallen to their most affordable level in three years, with RBC reporting their national affordability measure dropping to 55.1% in Q1 2025 [3]. Condo markets, in particular, have seen significant improvements, with some cities even returning to pre-pandemic affordability levels [3]. That said, Vancouver and Toronto continue to be Canada’s least affordable major markets [3]. Specifically in the GTA, June saw home sales tick 2.4% lower year-over-year, while new listings increased by 7.7%, contributing to a 5.4% decrease in the average selling price to $1,101,691 [4].
Population Dynamics and Future Outlook
Recent population declines in BC and Ontario, which are the largest since 1951, are prompting questions about future housing demand, especially given the federal government’s plans to trim immigration targets [5]. While some analysts believe national population growth will still exceed government forecasts, the CMHC highlights lower immigration as a “significant uncertainty” for the Canadian economy, expecting homebuying activity to falter in Ontario and BC [5]. This trend could also lead to a decrease in rental demand between 2025 and 2027 [5].
My Take
The current environment is truly a game of mixed signals. We’re seeing some welcome improvements in affordability and an increase in inventory, particularly here in the GTA, which is creating more opportunities for buyers. However, the underlying economic concerns in the US and the evolving landscape of population growth present ongoing complexities that we need to keep an eye on.
My advice remains consistent: This is a time for smart, informed decisions, not snap judgments based on headlines. Understanding how these trends specifically impact your mortgage strategy is crucial to finding the best path forward for you.
Let’s connect to discuss your unique situation.
Sources:
[1] “Residential Market Commentary – Bank of Canada balancing act,” First National Financial LP, June 30, 2025.
[2] “The Morning Bru,” RMG Mortgages, June 30, 2025.
[3] “Homeownership costs in Canada fall to most affordable level in three years,” Canadian Mortgage Trends, July 2025.
[4] “GTA home sales fall, listings tick higher again,” The Canadian Press, July 4, 2025.
[5] “Could population decline spell trouble for Canada’s housing market?,” MPA Magazine, July 4, 2025.