There’s no end in sight to the US-Canada tariff tussle – but mortgage market watchers aren’t panicking
Prime minister Mark Carney heads for the White House on Tuesday (October 7) with a huge question mark hanging over the outcome of the US-Canada trade war as housing and mortgage market watchers map out expectations for the months ahead.
That tariff turmoil has raged on for months, marked by waves of new levies and countermeasures, concessions, delays and huge uncertainty.
US president Donald Trump’s announcement of huge charges on Canadian goods crossing the border in the first quarter raised fears of a sharp economic downturn in Canada and effectively torpedoed hopes of a 2025 rebound in the national housing market.
Trump’s threatened blanket tariffs on all Canadian imports haven’t materialized, although plenty of levies remain – notably on steel, aluminum and lumber, as well as a new 25% charge on medium and heavy-duty trucks entering the US.
Those initial threats rattled homebuyers and pushed many to the sidelines while they waited to see the impact of the trade war on Canada’s economy.
But recent months have seen a slow uptick in sales activity across many markets – and Rasha Ingratta (pictured top), a mortgage agent with Shop Mortgages in Windsor, Ontario, said she’s noticed confidence gradually returning.
Rate cuts help calm some borrower jitters
Trump’s tariff plans arrived at an inopportune moment for the Canadian economy, with scores of borrowers facing mortgage renewals at much higher rates than when they took out their loans four or five years ago.
Still, Ingratta said a series of rate cuts by Canada’s central bank over the past year has helped ease some of that payment shock.
“We’ve definitely seen a shift in the market, especially when it comes to consumer confidence and affordability,” she told Canadian Mortgage Professional. “The Bank of Canada has gradually decreased the interest rates because inflation numbers have come down.
“This has brought back a little bit of consumer confidence. Rates have come down a little and people coming up for renewals are starting to notice the difference: rates are not as bad as they were about a year ago.”
That’s not to say borrowers aren’t feeling pain – particularly in tariff-impacted areas like Windsor, an automaking powerhouse that’s seen thousands of jobs jeopardized by Trump’s policies.
Financial strain can develop not just from job loss but also from having hours reduced or overtime cut, Ingratta said, potentially having a big impact on the amount of income borrowers can declare when applying for a mortgage or other loan.
“When you’re approving a client, let’s say you use their two-year T4 income to do a two-year average,” she said. “But in October, we look at their year-to-date paystub and it’s not on track to do what their two-year average states.
“Are lenders going to accept the two-year average? I don’t think so, because they’re not on track to making that.”
Focus on what you can control, urges broker
Senior government officials in Ottawa have already set expectations that Carney’s meeting with Trump this week is unlikely to move the needle much on negotiations to end the trade war, telling the Globe and Mail that it’s little more than a working visit.
For now, the mortgage industry can do little but wait and hope for a swift resolution to that tariff dispute – although one thing it can control is the clarity and quality of advice it gives clients.
Ingratta, who runs a team of agents, says she encourages them to tick off three boxes. “Clarity is really important: making sure the customer understands the process, the documentation, the overall as to why we’re moving forward with this product or that product,” she said.
“And then education: educate them on the different products, amortizations, why we’re choosing this lender over that lender.”
Last but not least – support. “Support comes not only during the mortgage application process and taking you to the finish line,” she said, “but [also] even after the closing, making sure the clients… understand the journey of taking them from A to Z whether they’re coming up for renewal, refinancing, purchasing, or going through a separation.”
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