Pro Funds Mortgages

From Scotiabank HIGHLIGHTS Nearly all Canadian provinces are poised for slowdowns in 2025. While the Canadian economy started the year with solid momentum, growth is expected to decelerate over the course of the year in the wake of the U.S. trade war and changes to Canadian immigration policy. Rising unemployment and lower population growth will weigh on consumption growth, and housing market activity has slowed as households delay major purchases. Exports are likely to decline due to the tariffs and spillovers from slower U.S. growth. We expect growth in central Canada to underperform the national average, given these provinces higher exposure to trade risks. While we continue to think a recession will be avoided, there is a high degree of uncertainty as to how the tariffs will ultimately impact the economyin addition to the possibility of new tariffs. Policy measures from the federal and provincial governments could provide a boost to economic activity, especially over the medium-term. That said, the tariffs and impact of elevated uncertainty are likely to weigh on growth in all regions of the country in the near-term, and compound the effects of sharply reduced population growth. Household spending growth is likely to slow. Household consumption started the year with strong momentum, aided by 225 basis points of interest rate cuts by the Bank of Canada between June 2024 and March 2025. Despite the tariffs and uncertainty that emerged early this year, retail sales in Q1 were solid again in aggregate, though this was to some extent driven by vehicle sales being pulled forward to March to avoid tariffs coming into effect in April, and indicated weakness in the most tariff-exposed economies of Ontario and Quebec. April and May data indicate that vehicle sales are slowing in Q2 and we expect this to continue throughout the year. In addition, drag from mortgage resets at higher interest rates is likely to continue, as we expect the Bank of Canada to hold off on further rate cuts until next year. The housing market has softened. Sales of existing homes slowed after the onset of the trade war in some provincesespecially the most expensive markets of B.C. and Ontario. However, housing market activity in the provinces east of Ontario has been remarkably resilient. New housing starts in B.C. and Ontario continue to trend lower, but residential construction contributed positively to growth in Q1 in most provinces, especially Saskatchewan. Abating economic uncertainty would release pent-up demand, especially in Ontario and B.C., where current sales rates remain below fundamental levels and new housing starts have been trending lower for some time. Falling interest rates would provide a further tailwind to residential activity, as will new government initiatives to support housing construction. That said, lower immigration will reduce some demand for housing, especially in the largest cities, which have long seen more than their fair share of newcomers to Canada. Additionally, the federal government has removed the GST first-time home buyers of new homes valued up to $1 mn, and reduced the GST on new homes between $11.5 mn for first-time home buyers. This policy will add to housing demand, however other factors such as tariff uncertainty and softer labour markets are likely to dominate in the near-term. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.the-provinces.scotiabank-s-provincial-outlook--june-27--2025-.html

From CMHC Canada faces a housing affordability challenge. For many years, housing prices and rents in Vancouver and Toronto attracted attention from all over the world. Over time, these increases came to burden many Canadians and their children. Low-income and some middle-class households struggle to even find a place to live, let alone at a price they can afford. On a wider scale, the productivity of the Canadian economy suffers from unaffordable housing as the capacity to attract skilled workers is diminished and the young are deterred from staying in our largest cities partly because of the lack of attainable housing. And Canadas enormous level of household debt creates a vulnerability in the event of a global economic crisis. Preview of results We find that housing starts need to double over the next decade. Compared to a projected rate of about 250,000 new housing units annually until 2035, Canada needs to increase housing starts to around 430,000 to 480,000 units per year to restore affordability (depending on parameters). This can only be possible with: a significantly greater workforce more private-sector investment changes in technology and productivity such as more automation and modular construction The need to increase housing supply remains critical. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/accelerate-supply/canadas-housing-supply-shortages-a-new-framework