The Canadian economy, more sensitive to interest rates, has slowed sharply due to the Bank of Canada’s measures to curb inflation to 2%.

Labour Market Trends

Canada’s jobless rate is now 6.5%, higher than in the US. Job vacancies have fallen, and while wage inflation remains sticky at 4.9%, it’s expected to ease as the labour market balances.

Inflation Update

Inflation in Canada rose to 2% year-over-year in October, up from 1.6% in September, driven by slower deflation in gasoline prices. While another large rate cut seems unlikely, a 25 bps cut is anticipated.

 Interest Rate Divergence

Canadian market-driven rates are significantly lower than in the US. The Bank of Canada has cut its overnight rate by 125 bps over four moves, compared to the Fed’s single 50 bps cut, benefiting Canada’s housing market.

Housing Market Revival

Housing activity is on the rise! More listings and lower rates are making homeownership more accessible. A steepening yield curve suggests variable mortgage rates may drop more significantly than fixed rates.

Outlook for 2025

The Bank of Canada is expected to continue easing rates through mid-2025, likely fueling a strong spring housing season as buyers and sellers gain confidence.

What It Means for You

Pent-up demand is energizing Canada’s housing market. With rates and prices aligning with buyer expectations, the housing sector is rebounding.

Stay tuned for updates—exciting times ahead for the Canadian economy and housing market!