How a Bank of Canada cut might affect housing, mortgages as U.S. tariffs intensify #CanadaFinance

In the face of ongoing uncertainty over U.S. tariffs, the relief offered by an expected Bank of Canada interest rate cut on Wednesday is unlikely to revive Canada’s sluggish housing market, industry experts say.

A 25-basis-point cut would have psychological value, bringing the rate below the three per cent barrier to 2.75 per cent, substantially lower than the post-COVID high of five per cent. And in doing so, it would make loans more attractive for home buyers at a time when there are more options to choose from — but many will still likely opt to wait, says Ron Butler, a mortgage broker at Butler Mortgage.

“There’s a level of uncertainty here I haven’t seen since the beginning of COVID or the 2008 financial crisis,” Butler told Yahoo Finance Canada. “This is profound uncertainty and prices have to become bargain basement to overcome that kind of uncertainty.”

The tariff situation “really changes the whole landscape because now everyone’s pausing, right?” says Kingsley Ma, area vice-president at RE/MAX Canada. “So, until it settles, it looks like activity-wise it’s going to be probably lesser than we all expected.”

January real estate data showed a national slowdown in sales and an increase in supply, with the Canadian Real Estate Association suggesting tariff uncertainty was at the root. A report from TD Economics says the Toronto and Vancouver markets have been “tepid” so far in 2025, with uncertainty likely to loom over buyers and sellers — and holding down prices as a consequence.

A rate cut on Wednesday might nonetheless provide some incentive for people who have saved and have been eyeing a spring home purchase, Ma says. “Now there’s more inventory out there, and on top of that, the interest rate drop will help them take a serious look at getting into the market,” he said, though such moves would likely mostly be limited to condos and entry-level homes.

If you’re a buyer and you think there’s going to be significant economic disturbance next year, I don’t think you’d buy today.Ron Butler, mortgage broker

Butler says the market could stir if the BoC opts for a 50-basis-point cut on Wednesday, even though such a move would indicate “fear and dread” at the Bank. “Not everybody sees 50 [basis points] and realizes that’s a version of panic and thinks ‘I better back off,’” Butler said. “Not everybody feels that way.”

Many people, however, will continue to wait it out, he says, because of the uncertainty and because home prices have remained relatively static. “If you’re a buyer and you think there’s going to be a significant economic disturbance next year, I don’t think you’d buy today.”