Brokers face a slower start to 2026 but a cautiously brighter second half
Economic momentum in Canada is expected to stay subdued into early 2026, with Deloitte trimming its growth call and warning of a “year of two halves” that keep mortgage professionals focused on rate stability, housing starts and trade risks.
Deloitte Canada lowered its 2026 GDP forecast to 1.5% from 1.7%, pointing to soft investment, weaker population growth and a still‑uncertain global backdrop.
Chief economist Dawn Desjardins framed the outlook as a slow grind rather than a new downturn, and one that still hinged on how the Canada‑United States‑Mexico Agreement (CUSMA) review plays out in July.
“We’re really looking for a pretty slow start of the year, accelerating in the second half, somewhat,” Desjardins said.
“It’s kind of characterizing it as a year of two halves, and where we got that softness in the first half and somewhat better activity in the second half, and looking to 2027, to see some stronger momentum building.”
Growth downgrade keeps pressure on borrowers
Desjardins said she expects the Bank of Canada to hold its policy rate at 2.25% through 2026, arguing that “we’re not seeing an economy that is running so hot that we have to be worried about a big build up in inflation pressures.”
That view aligns with earlier commentary that the Bank’s 2025 cuts have likely run their course, leaving borrowers facing a prolonged period of stable, but not cheap, money.
Trade, tariffs and housing outlook
Desjardins’s baseline assumed Canada would retain “pretty good access to the U.S. market without tariffs” despite combative rhetoric from Washington, helped by the fact that most Canadian exports already met CUSMA rules.
She cautioned, however, that negotiations could still unsettle business investment until after the review.
On the housing side, Deloitte points to federal and provincial initiatives that are expected to lift housing starts from last year’s levels, alongside a resale market that could “gain momentum now that the Bank of Canada’s easing cycle has ended.”
Royal LePage earlier projected aggregate home prices would edge 1% higher by late 2026, with a turbulent 2025 giving way to a modest recovery as trade tensions and rate volatility faded. IG Wealth Management likewise argued that recession risk would remain low into 2026 as easier financial conditions and an equity‑market wealth effect underpin housing demand.
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