BoC Rate Decision Unlikely to Stir Housing Market Amid Tariff Uncertainty, Experts Say
Homebuyers remain cautious despite the Bank of Canada’s upcoming interest rate decision, as tariff-driven economic uncertainty continues to weigh heavily on the housing market, according to industry experts.
Even if the BoC cuts its overnight rate on Wednesday, many buyers are expected to stay on the sidelines. “I don’t think it will be the usual spring market, as much as I hope it would be,” said Kingsley Ma, area vice-president at RE/MAX Canada. “All the buyers are on the sidelines because of the uncertainty… If you can’t pay the bills, it doesn’t matter what the interest rate is.”
Kelly Ho, a certified financial planner at DLD Financial Group, echoed that concern. “If there’s uncertainty about the ability to pay sizeable mortgages, then that throws everything up in the air.”
Only high-income earners seem to be active in the current market. “We see very, very little of what you would call average people purchasing homes,” said mortgage broker Ron Butler of Butler Mortgage.
While just over 60 per cent of economists surveyed by Reuters expect the BoC to hold steady at 2.75 per cent, previous rate cuts have done little to revive demand. “March was a slow month, and we likely will continue to see a slower market overall,” Ma noted, referencing modest stock market rebounds after U.S. President Donald Trump announced a 90-day tariff pause.
New data from the Canadian Real Estate Association (CREA) showed March sales down 4.4 per cent from February and 9.3 per cent lower than March 2024 — the slowest March since 2009. The steepest declines were seen in B.C. and Ontario.
“In short order we’ve gone from a slam dunk rebound year to treading water at best,” said CREA Senior Economist Shaun Cathcart. CREA has revised its 2025 forecast to 482,673 sales — flat from 2024 — marking a major downgrade from its earlier 8.6% growth projection.
Some relief may be on the horizon for those renewing mortgages. “Those who were initially nervous about their upcoming renewals are no longer nervous because it seems like we’re in a rate environment where there’s some stability,” said Ho.
BoC Governor Tiff Macklem said last month that “pervasive uncertainty” has made it harder to rely on a single economic forecast. Two paths seem plausible, Butler explained: one where rates drop significantly if the economy slows sharply, and another where rates rise if inflation flares up.
Mortgage decisions have also shifted with this uncertainty. Fixed mortgage rates have dipped below 4% recently, prompting more buyers to favor fixed over variable. The share of buyers opting for variable rates has fallen from around 33% in late 2024 to just 20–25%, Butler said.
Ho advises clients to think of the fixed vs. variable decision in terms of their risk tolerance — much like investing. “If you’re going to panic when the market drops, you’re probably better off with a fixed rate,” she said.
Even if trade tensions ease, market recovery may be slow. “You’re still looking at probably a couple months before consumers gain confidence,” Ma said. “People need time to settle in… to build that confidence back up.”
