Toronto | September 27, 2025 — Canada’s mortgage and housing market is showing faint signs of improvement, but major financial institutions and policy makers caution that the recovery could be slower than many hope.

CIBC Flags a Gradual Path Ahead

CIBC has warned that while lower interest rates may eventually bring back momentum, the overall recovery in the mortgage and housing markets is likely to remain slow. The reason? Uncertainty stemming from international trade disputes, especially with the United States, continues to cast a long shadow.

CIBC’s analysis points to the fact that Canadian exporters and industries linked to cross-border supply chains are struggling under the weight of tariffs and trade restrictions. These headwinds filter through the economy, reducing household income confidence and making potential homebuyers more cautious.

Bank of Canada’s Policy Lens

The Bank of Canada echoed this cautious tone in its latest monetary policy update. After cutting the benchmark overnight rate to 2.50 %, the central bank acknowledged that external risks—particularly U.S. tariffs and broader geopolitical tensions—played a big role in the decision.

Policymakers stressed that while domestic inflation is trending within target and household debt levels are stabilizing, the fragility of global trade dynamics could weigh on Canada’s growth outlook. This, in turn, influences the mortgage market, as lenders and borrowers both adjust expectations.

Policy Uncertainty Clouds Sentiment

Beyond trade, broader policy uncertainty is adding layers of complexity. For instance, new regulations around housing affordability programs, immigration flows, and provincial lending caps are still evolving. Many buyers remain unsure whether to jump into the market now or wait for clearer signals.

Financial institutions, too, are factoring this into their lending practices. Tightened underwriting standards and stricter scrutiny of borrower income are becoming common, particularly in sectors deemed higher risk.

Risks on the Horizon

Analysts outline a few scenarios that could prolong the slow recovery:

Extended Trade Tensions: If U.S. tariffs on Canadian exports persist, household confidence may remain weak, slowing home purchase activity.
Global Economic Volatility: A softening global economy could depress commodity exports, reducing income in key provinces such as Alberta and Saskatchewan.
Policy Reversals: Changes in federal housing policies or mortgage insurance guidelines could sway affordability metrics suddenly.

What It Means for Borrowers

For existing homeowners, this environment means a mixed bag. Rate cuts are providing some relief for variable-rate mortgage holders, but job market uncertainty could offset those gains. For new buyers, the prospect of lower rates is attractive, but the fear of economic slowdown tempers enthusiasm.

Outlook: A Patient Climb Ahead

The consensus is clear: while rate cuts help, Canada’s mortgage and housing recovery won’t be a quick rebound. Both borrowers and lenders must prepare for a gradual climb, with 2026 shaping up to be a testing year.