Canada's Mortgage Market Braces for Trade War Impact

The ongoing trade war between Canada and the United States is putting pressure on the country's mortgage and housing market. A study by University of Calgary economics professor Trevor Tombe found that 50% tariffs imposed on select Canadian exports could result in nearly 90,000 job losses.

According to Neil Drepaul, a representative from Canadian Mortgage Services, existing and prospective homeowners may face higher borrowing costs, higher material and construction costs, weaker near-term housing demand, and slower long-term housing supply growth due to the trade war.

Goldman Sachs projects that the latest round of tariffs will reduce Canadian GDP by 0.3% and increase inflation by about the same proportion. The bank suggests that this may prevent the Bank of Canada from adjusting interest rates 'for the foreseeable future.'

Bruno Valko, vice-president of national sales at RMG Mortgages, warns of stagflation, which combines elevated inflation with weak economic growth and often higher unemployment.