Homebuyers, wrestling with the same tariff-fuelled uncertainty as the Bank of Canada (BoC), are likely to take little notice of the Bank of Canada’s decision to hold its interest rate steady today, industry experts say. The housing market slowed to a crawl as the tariff threat began to take shape earlier this year, a pace likely to persist through the usually active spring season even had the BoC chosen to make another cut.

“I don’t think it will be the usual spring market, as much as I hope it would be,” Kingsley Ma, an area vice-president at RE/MAX Canada, told Yahoo Finance Canada. “All the buyers are on the sidelines because of the uncertainty, right? If you can’t pay the bills, it doesn’t matter what the interest rate is, because they’re all worried about their job security and things like that.”

“If there’s uncertainty about the ability to pay sizeable mortgages, then that throws everything up in the air,” said Kelly Ho, a certified financial planner at DLD Financial Group.

The limited activity happening in the market is largely by people earning significant salaries who can handle economic turbulence, says Ron Butler, a mortgage broker at Butler Mortgage. “We see very, very little of what you would call average people purchasing homes,” he said.

According to Reuters, market odds following Tuesday’s inflation data release suggested a roughly even chance the BoC will stand pat at 2.75 per cent. But the BoC’s previous cut in March did little to move the market anyway, Ma says.

“Obviously, March was a slow month, and we likely will continue to see a slower market overall,” he said. “Because, I mean, even if you look at the stock market — it’s not good, even though it kind of bounced back a little bit” after U.S. President Donald Trump announced a 90-day pause on reciprocal tariffs.

Data published by the Canadian Real Estate Association (CREA) on Tuesday showed March sales down 4.4 per cent from February. Non-seasonally-adjusted March figures were 9.3 per cent lower than March 2024 and the lowest March numbers since 2009, CREA says. The decline in activity was most pronounced in B.C. and Ontario, according to CREA’s data and generally down in “all but a handful of small markets” Canada-wide.

“In short order we’ve gone from a slam dunk rebound year to treading water at best,” Shaun Cathcart, CREA’s Senior Economist, said in a statement.

CREA now projects 482,673 home sales in 2025, essentially the same number as in 2024, and “a large downward revision” from the 8.6 per cent increase in annual sales it had forecast in January. The situation is slightly less grim for those looking to renew, Ho, the financial planner, says. “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, or perhaps even rates going down,” she said.

In a speech in Calgary last month, BoC governor Tiff Macklem said the “pervasive uncertainty” meant the Bank would focus less on a specific economic outlook because “several outcomes can all look plausible.”

From a mortgage standpoint, Butler says two scenarios look plausible at this point — one in which rates are cut significantly lower as the economy sputters, and one in which rates rise in response to significant inflation. If unemployment spikes and GDP crashes, Butler says, the BoC might cut rates down to, say, 1.75 per cent, and variable mortgage rates would follow a similar path. “It may not pull fixed [mortgage rates] down, because fixed has to exist in a world of government bond trading that is receiving some unique pressures,” he said, referring to the uncharacteristically turbulent bond market to which fixed rates are tied.

“Another scenario is inflation does perk up,” Butler said, to somewhere above three per cent, “at which point the Bank of Canada could say, ‘Oh, geez, we’re definitely not cutting, and fixed rates could rise based on this obvious inflation.”

Fixed vs. variable: What’s your risk tolerance?

The overall economic uncertainty also changes the stakes around choice of mortgage. Butler says fixed rates have been fairly consistently coming in below four per cent in recent weeks, a number at which more people opt for the stability of a fixed rate. The proportion of people choosing variable rate mortgages for a home purchase was as high as around one-third in the second half of 2024, he says, but that has retreated to around 20 to 25 per cent as fixed rates fall.

Ho says she counsels her clients to think about fixed versus variable in the same way they think about their investments. “How are you going to react if you know the markets drop this much, you know, are you going to hit the panic button? And variable versus fixed, it’s the same concept,” she said.

If the trade war is resolved in some way, the market will likely remain quiet for a while, Ma says. “I think you’re still looking at probably a couple months before consumers gain confidence in making any purchases,” he said.

The sheer scale and size of the tariffs, when announced, took markets and individuals largely by surprise, Ma says. “So, people need time to settle in, even when the tariffs and everything are over, to build that confidence back up, you know, to plan.”

JOHN MCFARLANE – YAHOO FINANCE CANADA
PUBLISHED APRIL 16, 2025