July 30, 2025 • 9 mins
In this episode, the conversation begins with an introduction and a sponsor message. The discussion then moves to the Bank of Canada's monetary policy and its economic outlook. Economists' perspectives on interest rates and inflation are explored, followed by an analysis of U.S. tariffs and their effects on the Canadian housing market. The episode delves into the challenges faced by the lumber market and the implications for regional housing starts. Additionally, mortgage trends among young families and the role of intergenerational wealth are examined. The episode concludes with closing remarks and a sponsor reminder.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to the Ontario Mortgage & Real EstateInsights Podcast, your go-to source for the
(00:05):
latest developments, trends, and regulatorychanges in the industry.
I'm your host, Steve Hamoen, here to provideyou with insights sourced from reputable news
outlets to help you stay informed and makewell-informed decisions.
This podcast is brought to you by Real ApprovedInc., a trusted mortgage brokerage dedicated to
(00:27):
helping Canadians achieve their homeownershipdreams.
Visit realapproved.ca to learn more about howour experienced team can assist you with your
mortgage needs.
Let's dive into today's episode.
Today, we're discussing the Bank of Canada'srecent decision to hold its key interest rate
steady at 2.75%.
(00:48):
This marks the third consecutive pause in theirrate-cutting cycle.
However, the Bank has indicated that theremight be a growing case for future rate cuts
due to increasing economic slack and a complextrade outlook.
That's right, Steve.
The Bank's Monetary Policy Report suggests thateconomic indicators are showing excess supply
(01:09):
in the economy.
The output gap, which measures the differencebetween the actual output and the potential
output of the economy, has widened.
It's now estimated between -1.5% and -0.5%, upfrom the previous range of -1.0% to 0%.
(01:30):
Exactly, Janine.
And while core inflation remains elevated ataround 2.5%, it's still below the peak of over
3% seen earlier this year.
The trade disruptions, particularly thoseinvolving U.S.
tariffs, are significantly impacting the Bank'soutlook.
The Monetary Policy Report forecasts a 1.5%contraction in the second quarter GDP due to
(01:52):
these factors.
It's interesting to note, Steve, that the Bankis forecasting modest growth of just 1% for the
third quarter, with full-year growth of 1.3% in2025 and 1.1% in 2026, assuming current tariff
levels remain in place.
(02:12):
The Bank has also presented three scenariosconcerning trade: current tariffs,
de-escalation, and escalation, which reallyhighlights the uncertainty in the trade
landscape.
Right, Janine.
Economists like Douglas Porter from BMO suggestthat the Bank is keeping its options open,
maintaining flexibility in its policy stance.
(02:35):
Porter says the Bank appears comfortableholding rates at 2.75%, but more clarity on
trade and inflation is needed before they canmake any major policy shifts.
And TD Senior Economist Andrew Hencic pointedout that the current outlook leaves room for
potential cuts in the months ahead.
He mentioned that a plausible economic pathmight fall between the current and
(02:57):
de-escalation scenarios, which could justifyreducing the overnight rate if excess supply
continues to build up.
The Bank's next rate decision is set forSeptember 17, and by then, we'll have more data
on GDP and inflation.
This could influence whether a rate cut is onthe horizon.
As Douglas Porter noted, those hoping for cutsmay need to be patient as the Bank waits for
(03:20):
more real-time developments.
The threat of United States tariffs is hangingover homebuilders in Canada like a dark cloud,
creating a sense of uncertainty andinstability.
The Canadian Home Builders Association (CHBA)has reported that builder confidence has not
improved much from the first quarter to thesecond quarter of 2025.
(03:43):
This is affecting both single-family andmulti-family home markets.
That's a tough situation for builders, Steve.
The CHBA's housing market index shows apersistent pessimism within the construction
industry.
The high construction costs are a majorcontributor to this negative sentiment.
(04:03):
Absolutely, Janine.
And the situation was made worse recently whenthe United States government decided to
increase anti-dumping duties on Canadiansoftwood lumber.
This aggressive stance on Canadian imports isleaving the lumber market without good news,
according to wood market expert Russ Taylor.
It must be really challenging for the sawmillsin British Columbia, Steve.
(04:25):
They are facing so much uncertainty regardingthe levies their products might face due to
these trade tensions.
It's like they have to plan for multiplescenarios without knowing which one will
actually happen.
You are right, Janine.
The looming August 1 deadline for a tariff dealset by U.S.
President Donald Trump adds even more pressure.
(04:46):
If no deal is struck, we might see a new waveof tariffs, and this is separate from the
ongoing lumber duties.
It is a very complex situation.
And that complexity is definitely affecting theconfidence of Canadian homebuilders.
The potential for more tariffs could weaken thesawmills further and hurt the construction
outlook.
(05:06):
This sense of chaos is making it hard forcompanies to plan effectively.
Yes, and the ongoing Section 232 investigationby the U.S.
government into lumber imports adds anotherlayer of uncertainty.
The investigation's findings could lead to evenmore tariffs, creating additional hurdles for
Canadian lumber producers.
(05:27):
It seems like there's no clear path forward forthe construction industry in Canada, at least
in the short term.
However, the Canada Mortgage and HousingCorporation (CMHC) has noted that while some
regions like Atlantic Canada, the Prairies, andQuebec might remain strong, British Columbia
and Ontario are expected to see a fall inhousing starts due to high prices and increased
(05:48):
construction costs.
Indeed, Janine.
The situation remains fluid, and until there'smore clarity on the trade front, Canadian
homebuilders will need to navigate thischallenging landscape with caution.
Let's wrap up today's episode with someinsights into a surprising trend concerning
young families in the housing market.
Despite rising housing costs, new data from TDEconomics reveals that young Canadian families
(06:12):
are actually carrying smaller mortgagebalances.
This is quite an interesting developmentconsidering the current affordability
challenges.
It is indeed, Steve.
The report highlights that average mortgagebalances among households where the primary
earner is under 35 years old have decreased byfifteen thousand five hundred dollars since
(06:33):
their peak in the third quarter of 2022.
This is a significant contrast to other agegroups, where mortgage debt is on the rise.
Precisely, Janine.
During the same period, mortgage balances forhouseholds aged fifty-five to sixty-four
increased by eighteen thousand dollars, and forthose sixty-five and older, they rose by four
(06:55):
thousand dollars.
It suggests that young families are eitheropting for less expensive homes or, in some
cases, avoiding homeownership altogether due toaffordability challenges.
And that challenge is quite real, Steve.
Statistics Canada's 2024 Canadian Social Surveyfound that more than half of young people are
(07:16):
very concerned about their ability to affordhousing.
Many are choosing to rent, with thirty-fivepercent of young adults renting compared to
twenty-three percent of older age groups.
Yet, despite these challenges, the total valueof real estate assets held by young families
has increased since the third quarter of 2022.
(07:37):
This suggests a growing share of youngerhouseholds might be owning their homes
outright, without any mortgage.
That's a hopeful sign, Steve.
The Survey of Financial Security found thateight percent of young households owned their
property free and clear in 2023, which is thehighest share on record.
(07:57):
It seems intergenerational wealth transferplays a crucial role here, helping young
families reduce their mortgage debt despitemodest income growth.
Absolutely, Janine.
The report indicates that a significant numberof young families are receiving support from
their parents, either through co-ownership orgifted down payments.
This support is crucial, especially since thedebt-to-income ratio for the lowest-income
(08:21):
young households has surged dramatically,indicating rising financial strain.
It's heartening to see families come togetherto support the younger generation, but it also
highlights the growing intergenerationalinequality.
As younger families manage to reduce debt,older age groups are taking on more,
particularly those nearing retirement.
(08:44):
Indeed, Janine.
This data gives us a nuanced look at thehousing market's complexities, especially for
young families.
It's a reminder that while there arechallenges, there are also opportunities for
adaptation and support.
Thanks for tuning in to another episode of theOntario Mortgage & Real Estate Insights
Podcast.
(09:04):
We hope you found today's insights valuable asyou navigate the world of mortgages and real
estate.
Before you go, a quick reminder (09:09):
Real Approved is here to make your mortgage journey smoother.
Whether you're buying your first home orrefinancing, their experienced team is ready to
guide you with personalized support every stepof the way.
Visit realapproved.ca to get started and takethe next step toward achieving your
homeownership goals. Catch you next time, and stay informed with the latest industry
(09:32):
insights!
Welcome to the Ontario Mortgage & Real EstateInsights Podcast, your go-to source for the
(00:05):
latest developments, trends, and regulatorychanges in the industry.
I'm your host, Steve Hamoen, here to provideyou with insights sourced from reputable news
outlets to help you stay informed and makewell-informed decisions.
This podcast is brought to you by Real ApprovedInc., a trusted mortgage brokerage dedicated to
(00:27):
helping Canadians achieve their homeownershipdreams.
Visit realapproved.ca to learn more about howour experienced team can assist you with your
mortgage needs.
Let's dive into today's episode.
Today, we're discussing the Bank of Canada'srecent decision to hold its key interest rate
steady at 2.75%.
(00:48):
This marks the third consecutive pause in theirrate-cutting cycle.
However, the Bank has indicated that theremight be a growing case for future rate cuts
due to increasing economic slack and a complextrade outlook.
That's right, Steve.
The Bank's Monetary Policy Report suggests thateconomic indicators are showing excess supply
(01:09):
in the economy.
The output gap, which measures the differencebetween the actual output and the potential
output of the economy, has widened.
It's now estimated between -1.5% and -0.5%, upfrom the previous range of -1.0% to 0%.
(01:30):
Exactly, Janine.
And while core inflation remains elevated ataround 2.5%, it's still below the peak of over
3% seen earlier this year.
The trade disruptions, particularly thoseinvolving U.S.
tariffs, are significantly impacting the Bank'soutlook.
The Monetary Policy Report forecasts a 1.5%contraction in the second quarter GDP due to
(01:52):
these factors.
It's interesting to note, Steve, that the Bankis forecasting modest growth of just 1% for the
third quarter, with full-year growth of 1.3% in2025 and 1.1% in 2026, assuming current tariff
levels remain in place.
(02:12):
The Bank has also presented three scenariosconcerning trade: current tariffs,
de-escalation, and escalation, which reallyhighlights the uncertainty in the trade
landscape.
Right, Janine.
Economists like Douglas Porter from BMO suggestthat the Bank is keeping its options open,
maintaining flexibility in its policy stance.
(02:35):
Porter says the Bank appears comfortableholding rates at 2.75%, but more clarity on
trade and inflation is needed before they canmake any major policy shifts.
And TD Senior Economist Andrew Hencic pointedout that the current outlook leaves room for
potential cuts in the months ahead.
He mentioned that a plausible economic pathmight fall between the current and
(02:57):
de-escalation scenarios, which could justifyreducing the overnight rate if excess supply
continues to build up.
The Bank's next rate decision is set forSeptember 17, and by then, we'll have more data
on GDP and inflation.
This could influence whether a rate cut is onthe horizon.
As Douglas Porter noted, those hoping for cutsmay need to be patient as the Bank waits for
(03:20):
more real-time developments.
The threat of United States tariffs is hangingover homebuilders in Canada like a dark cloud,
creating a sense of uncertainty andinstability.
The Canadian Home Builders Association (CHBA)has reported that builder confidence has not
improved much from the first quarter to thesecond quarter of 2025.
(03:43):
This is affecting both single-family andmulti-family home markets.
That's a tough situation for builders, Steve.
The CHBA's housing market index shows apersistent pessimism within the construction
industry.
The high construction costs are a majorcontributor to this negative sentiment.
(04:03):
Absolutely, Janine.
And the situation was made worse recently whenthe United States government decided to
increase anti-dumping duties on Canadiansoftwood lumber.
This aggressive stance on Canadian imports isleaving the lumber market without good news,
according to wood market expert Russ Taylor.
It must be really challenging for the sawmillsin British Columbia, Steve.
(04:25):
They are facing so much uncertainty regardingthe levies their products might face due to
these trade tensions.
It's like they have to plan for multiplescenarios without knowing which one will
actually happen.
You are right, Janine.
The looming August 1 deadline for a tariff dealset by U.S.
President Donald Trump adds even more pressure.
(04:46):
If no deal is struck, we might see a new waveof tariffs, and this is separate from the
ongoing lumber duties.
It is a very complex situation.
And that complexity is definitely affecting theconfidence of Canadian homebuilders.
The potential for more tariffs could weaken thesawmills further and hurt the construction
outlook.
(05:06):
This sense of chaos is making it hard forcompanies to plan effectively.
Yes, and the ongoing Section 232 investigationby the U.S.
government into lumber imports adds anotherlayer of uncertainty.
The investigation's findings could lead to evenmore tariffs, creating additional hurdles for
Canadian lumber producers.
(05:27):
It seems like there's no clear path forward forthe construction industry in Canada, at least
in the short term.
However, the Canada Mortgage and HousingCorporation (CMHC) has noted that while some
regions like Atlantic Canada, the Prairies, andQuebec might remain strong, British Columbia
and Ontario are expected to see a fall inhousing starts due to high prices and increased
(05:48):
construction costs.
Indeed, Janine.
The situation remains fluid, and until there'smore clarity on the trade front, Canadian
homebuilders will need to navigate thischallenging landscape with caution.
Let's wrap up today's episode with someinsights into a surprising trend concerning
young families in the housing market.
Despite rising housing costs, new data from TDEconomics reveals that young Canadian families
(06:12):
are actually carrying smaller mortgagebalances.
This is quite an interesting developmentconsidering the current affordability
challenges.
It is indeed, Steve.
The report highlights that average mortgagebalances among households where the primary
earner is under 35 years old have decreased byfifteen thousand five hundred dollars since
(06:33):
their peak in the third quarter of 2022.
This is a significant contrast to other agegroups, where mortgage debt is on the rise.
Precisely, Janine.
During the same period, mortgage balances forhouseholds aged fifty-five to sixty-four
increased by eighteen thousand dollars, and forthose sixty-five and older, they rose by four
(06:55):
thousand dollars.
It suggests that young families are eitheropting for less expensive homes or, in some
cases, avoiding homeownership altogether due toaffordability challenges.
And that challenge is quite real, Steve.
Statistics Canada's 2024 Canadian Social Surveyfound that more than half of young people are
(07:16):
very concerned about their ability to affordhousing.
Many are choosing to rent, with thirty-fivepercent of young adults renting compared to
twenty-three percent of older age groups.
Yet, despite these challenges, the total valueof real estate assets held by young families
has increased since the third quarter of 2022.
(07:37):
This suggests a growing share of youngerhouseholds might be owning their homes
outright, without any mortgage.
That's a hopeful sign, Steve.
The Survey of Financial Security found thateight percent of young households owned their
property free and clear in 2023, which is thehighest share on record.
(07:57):
It seems intergenerational wealth transferplays a crucial role here, helping young
families reduce their mortgage debt despitemodest income growth.
Absolutely, Janine.
The report indicates that a significant numberof young families are receiving support from
their parents, either through co-ownership orgifted down payments.
This support is crucial, especially since thedebt-to-income ratio for the lowest-income
(08:21):
young households has surged dramatically,indicating rising financial strain.
It's heartening to see families come togetherto support the younger generation, but it also
highlights the growing intergenerationalinequality.
As younger families manage to reduce debt,older age groups are taking on more,
particularly those nearing retirement.
(08:44):
Indeed, Janine.
This data gives us a nuanced look at thehousing market's complexities, especially for
young families.
It's a reminder that while there arechallenges, there are also opportunities for
adaptation and support.
Thanks for tuning in to another episode of theOntario Mortgage & Real Estate Insights
Podcast.
(09:04):
We hope you found today's insights valuable asyou navigate the world of mortgages and real
estate.
Before you go, a quick reminder (09:09):
Real Approved is here to make your mortgage journey smoother.
Whether you're buying your first home orrefinancing, their experienced team is ready to
guide you with personalized support every stepof the way.
Visit realapproved.ca to get started and takethe next step toward achieving your
homeownership goals. Catch you next time, and stay informed with the latest industry
(09:32):
insights!
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