Every time the Bank of Canada makes an interest rate announcement, there’s a wave of speculation—rate cut? rate hike? hold? But before jumping to conclusions, it’s worth stepping back and understanding why the BoC does what it does.

Here’s the key: when it comes to the overnight rate, the Bank of Canada has one core mandate—keep inflation between 1% and 3%, with a 2% target. That’s it. Their role isn’t to manage the housing market, support job growth, or stabilize the Canadian dollar. Their sole focus is inflation: where it is today, and where they believe it’s heading.

Recent Data Points: What’s Guiding Their Thinking?

Let’s look at what the BoC is seeing right now that led to their decision to maintain its overnight interest rate today at 2.75%:

1. GDP Surprised to the Upside Canada’s Q1 GDP came in at 2.2%—a much stronger number than many expected. While some of that strength may be temporary (companies restocking ahead of tariffs, for example), it still shows momentum. And with the economy growing, it’s hard to justify a rate cut. Many believe this growth is temporary, and future data will show an economy in decline.

2. Core Inflation Remains Stubborn While the headline inflation number dropped to 1.7%, core inflation—which strips out volatile items and is the BoC’s preferred measure—rose to 2.59%. That’s above target and moving in the wrong direction. For a rate cut to be on the table, inflation needs to show consistent, sustainable progress downward.

3. A Stronger Canadian Dollar The loonie has rebounded a bit in recent months. Cutting rates now would likely send it lower again. A weaker dollar increases the cost of imported goods, which can reignite inflation—something the BoC is actively trying to avoid.

What the Bank Isn’t There to Do

It’s important to remember: the Bank of Canada doesn’t set interest rates to influence real estate prices or provide relief for mortgage holders. That might feel frustrating, especially in a market that’s been correcting. But their job is to respond to economic data—not to proactively steer individual sectors of the economy.

The expectation that rate cuts should be used to “rescue” the housing market has grown in recent years, especially post-COVID. But central banks are meant to react to actual conditions—not speculative behavior. And while low rates during COVID may have conditioned Canadians to expect quick relief during downturns, that isn’t the norm.

Real Estate: A Market Finding Its Balance

We’re seeing a natural correction in real estate. Prices are softening, and sales are down. While this can be painful, especially for over-leveraged homeowners, it also creates opportunities for first-time buyers. What one seller loses, a buyer gains in affordability.

This transition may be uncomfortable, but it’s part of a healthier long-term reset. It allows inventory to move, wealth to shift, and future buyers to re-enter the market with more confidence.

Final Thoughts

The Bank of Canada will continue to follow the data. And unless inflation starts trending down consistently, particularly core inflation, rate cuts are unlikely in the near term. That said, as the economy continues to worsen, predictions are that at least two more rate cuts are forthcoming in the second half of this year. If you’re hoping for a quick drop in variable mortgage rates, staying grounded in the numbers that actually move policy is important.

As more Canadians approach retirement without full pension coverage and rising living costs, reverse mortgages are becoming an increasingly popular option. Sixty-seven percent of Canadian homeowners aged over 55 are concerned that, with the increase in the cost of living and inflation, their retirement savings will no longer be enough to maintain their lifestyle through retirement. Is a reverse mortgage the right move for you or your aging parents?

1. What Is a Reverse Mortgage?

A reverse mortgage allows homeowners aged 55+ to access up to 55% of their home’s equity as tax-free cash, without having to sell or move. No monthly payments are required; the loan is repaid upon the sale of the house or the homeowner's passing.

2. Who Should Consider One?

Reverse mortgages can be helpful for:

• Retirees who are house-rich but cash-poor
• Those who want to age in place
• Individuals looking to fund in-home care, renovations, or supplement income
• Those wanting to provide their children with a living inheritance to see them enjoy it while they are still alive

3. Pros and Cons to Consider

Pros:

• No required monthly payments
• Access to tax-free cash
• Can preserve other investments or RRSP's
• You still own your home
• Does not affect government benefits like CPP, GIS or OAS
• Home equity guarantee, ensuring that you will never owe more than your property’s fair market value

Cons:

• Interest compounds over time
• Reduces equity for heirs
• Higher interest rates than a HELOC or traditional mortgage
• Early repayment penalties may apply if you plan to sell your home soon

4. What Lenders Are Looking For

Reverse mortgages in Canada (such as those from HomeEquity Bank, Bloom, or Equitable Bank) evaluate:

• The value and location of the home
• The age of the homeowner
• Existing mortgage balances (if any)

5. Alternatives You Should Evaluate

Before deciding, consider:

• A HELOC (Home Equity Line of Credit) if you have enough income to qualify for one
• Downsizing if you don't want to age in place in your current home to free up cash flow and/or pay down debt
• Refinancing with a traditional mortgage if you are still working and can qualify
• Each option has different impacts on cash flow, estate value, and long-term financial planning.

Reach out if you have any questions or if you or someone you know would be a fit for a reverse mortgage. I'm always here to help!

The Liberal Party has secured a fourth term—this time under new leader Mark Carney—and while it’s another minority government, the implications for the mortgage and housing markets are meaningful. From tax reform to housing incentives, there’s plenty for mortgage professionals and borrowers to watch closely.

1. GST Removed for First-Time Buyers on New Homes Under $1M

One of the most tangible impacts for new buyers: the removal of GST on new homes priced under $1 million for first-time buyers. This could save buyers up to $50,000 on a $950,000 home, significantly improving affordability in high-priced markets of Ontario.

Mortgage Implication: Expect a surge in demand for new builds under the $1M threshold, especially from first-time buyers. Get pre-approved early in your home-buying journey.

2. $25B in Housing Investment = More Inventory (Eventually)

The Liberals plan to inject over $25 billion in affordable housing development, including partnerships with private and non-profit developers.

Mortgage Implication: While this won’t ease supply constraints overnight, it signals more long-term inventory, which could gradually cool home price growth and improve housing choice for buyers locked out of today’s tight market.

3. Fiscal Stimulus May Delay or Moderate Rate Cuts

The proposed $77 billion in new fiscal spending (equal to 2.5% of GDP) includes infrastructure and tax cuts. While supportive of the economy, it may slow the Bank of Canada’s pace of rate cuts by adding inflationary pressure.

Mortgage Implication: Be prepared for continued rate volatility. Rate holds and pre-approvals are a strategic move heading into renewals or purchases.

4. Tax Changes Could Boost Investor Activity

The Liberals plan to cut the lowest personal income tax bracket by 1% and roll back capital gains inclusion increases—potentially benefitting investors, especially those holding real estate portfolios.

Mortgage Implication: Expect renewed interest in rental and investment property financing. This may create competitive situations as seasoned investors and new entrants are attracted by tax efficiency.

5. Mild Recession Still Possible—But Shorter

While stimulus may soften the blow, economists still predict a mild recession, with rising deficits and debt levels. That said, housing-related spending could buffer job losses in construction and real estate.

Mortgage Implication: Now is a good time to look at refinancing, debt consolidation, and switching lenders to improve cash flow. A proactive strategy could help weather short-term economic uncertainty.

Final Takeaways

This Liberal win comes with a new fiscal playbook: big spending, targeted housing relief, and moderate tax cuts. For the mortgage market, this means more opportunities—especially for first-time buyers and investors—but also a continued need for strategic advice in a still-uncertain rate environment.

Reach out if you have any questions, or want to review your situation together.