Mortgage Minute: The “Split Market” Arrives. A Rate Cut for Some, a Squeeze for Others.

This week, the Canadian mortgage market was defined by a series of deep contradictions. While the Bank of Canada’s 0.25% rate cut provided welcome relief, the fine print of the week’s economic news revealed a new and complex “split market.”

The path forward for a salaried home buyer is now very different from the path for a self-employed business owner.

Here is a breakdown of the two realities that emerged this week.

Reality 1: The Good News

• Bank of Canada Cuts Rate: The Bank of Canada cut its overnight rate by 0.25% to 2.25%, and the Big Six banks quickly followed, lowering their prime rates. This provides immediate cash-flow relief for all variable-rate and HELOC borrowers (approximately $70/month per $500,000 in mortgage balance).
• Ontario Proposes New Buyer Rebate: The Ontario government proposed a plan to remove the 8% provincial portion of the HST on newly built homes for first-time buyers. This is a significant move aimed at improving affordability for those trying to enter the market.

Reality 2: The Tougher Reality

• The “Pause” is Official: The real story from the Bank of Canada was not the cut, but the signal that this is the end of the easing cycle. Governor Macklem stated the new 2.25% rate is “about the right level,” confirming the “wait-and-see” strategy for lower rates is now over.
• The “Renewal Storm” vs. Bank Optimism: A report that broke today (October 31) warned of a “significant mortgage renewal cycle,” with the Bank of Canada forecasting an average monthly payment spike of $400 for those renewing at the peak. This headline sounds alarming, but the Big Banks themselves remain optimistic. TD Bank, for example, noted that due to falling rates, they expect 64% of their 2026 renewals to actually see lower payments.

My Take: The Real Split

How can renewals be a “storm” while banks are optimistic? The answer lies in the “split market.”

The Big Banks are not worried because their clients are, on average, in strong financial positions (RBC, for example, reported an average FICO score near 800).

The real pressure is on the alternative lenders.

New reports this week show that mortgage delinquencies are rising sharply at mid-size alternative lenders like Equitable Bank and Fairstone. This is critical because these are the essential, go-to lenders for self-employed individuals, business owners, and new Canadians.

As these lenders get squeezed, their underwriting standards will get stricter.

This means the path for a salaried employee with a T4 is becoming more straightforward. But for an entrepreneur, your options are narrowing, and your need for a perfectly prepared file is now non-negotiable.

In this split market, a generic pre-approval is not enough. You need a specific plan. My “Clarity Blueprint” system is designed to build a lender-ready file that answers a lender’s questions before they are asked, giving you the best possible chance of success.