CUSMA review and slower growth puts mortgage market on watch
Canada’s economy appears to be heading into the mid‑2020s in better shape, but looming trade renegotiations and softer growth projections have put the housing and mortgage sectors on alert.
New research from the Conference Board of Canada projected real GDP growth of 1.7% in 2025 and 1.3% in 2026, pointing to government stimulus, stronger business investment and improving consumer confidence as supports for activity.
“While the Canada–U.S.–Mexico Agreement negotiations later in 2026 could either support or hinder growth, we anticipated the latest federal budget would undoubtedly boost economic activity,” said Cory Renner, director, economic forecasting at the Conference Board of Canada.
“In one way or another, the budget would help growth prospects in every area of the economy, from trade and investment to housing and consumers.”
Canada’s labour market is expected to enter 2026 on relatively firm footing, but weaker population growth and planned federal workforce reductions are set to “dampen job growth in the second half of 2026 and into 2027,” the Board said, underscoring a cooler backdrop for housing demand.
Housing projections point to a slower, uneven recovery
Despite modest affordability gains and solid housing starts, the Board said Canada’s housing market continue to face challenges, with economic uncertainty, slower population growth and labour conditions weighing on homebuyers and builders. It expected housing activity to ease over the next few years, a call broadly echoed by other forecasters.
Canada Mortgage and Housing Corporation projected further cooling through 2025, with average prices slipping about 2% and steeper drops in Ontario and British Columbia, before a gradual housing market recovery beginning in 2026 as trade tensions ease, economic confidence improves and mortgage rates moderate.
Trade uncertainty keep borrowers and lenders cautious
Within the mortgage industry, US trade policy and the 2026 CUSMA review are already being treated as a critical swing factor. Bank of Montreal chief economist Doug Porter previously told Canadian Mortgage Professional that Canada still has “this really dark cloud of USMCA … uncertainty hanging over us” and that “what the housing market really needs is some clarity on the trade front.”
RBC Economics, commenting on the Bank of Canada’s stance, stressed that monetary policy “cannot resolve trade uncertainty or offset the impacts of a trade war,” highlighting limits to how far rate cuts alone could support growth.
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