Dovish Turns, Rent Relief, and Condo Chaos: Canada’s Housing Market Takes a Fall 🍂

📊 Rate Watch: Dovish Central Bank Signals, Strong CPI — What It Means for Mortgage Rates

Mortgage rates are finally showing signs of life (at least at the bond yields stage, your favourite retail bank as usual takes forever to pass rate cuts) — here's what’s driving it and what you should watch for:

• Despite September’s hotter-than-expected inflation (CPI up 2.4% YoY), much of the rise was driven by base effects in gasoline and seasonal factors in travel and food prices. Underlying inflation remains sticky, but the Bank of Canada is weighing broader metrics that suggest we're trending closer to its 2% target.

• Meanwhile, the U.S. Federal Reserve took a dovish turn last week, citing rising employment risks. Markets now see a 97% chance of a Fed cut on Oct 29 — pulling U.S. and Canadian bond yields down in sympathy.

What This Means: Lenders are signalling a lowering of fixed rates slightly, and more cuts could follow if rate expectations hold. Variable rate discounts remain unchanged, but we still expect further BoC cuts over the coming months.

Recommendations for borrowers: With 5-year fixed and variable rates now both competitive, borrowers should focus on flexibility, risk tolerance, and future income expectations. Variable may win on cost — but only for those who can stomach short-term volatility.

If you have questions, let's talk strategy — and lock in the right mortgage for your goals. Reach out today www.ronmortgages.com 

Real Estate Radar: Rents Drop to Two-Year Lows — Ontario Joins the National Cooldown

Canada’s rental market continued its downward trend in September, offering a rare window of relief for tenants — especially in previously overheated areas like Toronto.

📉 National Overview

• Average asking rent: $2,123 — down 3.2% year-over-year

• Marks the 12th consecutive month of rent declines following 38 straight months of increases (Aug 2021–Sept 2024)

• First two-year rent drop since January 2022

• Rent declines driven by:

  • Surge in rental supply (especially completions)

  • Slower population growth (non-permanent residents)

  • A cooling job market

📍 Ontario Focus

• Ontario rents fell 2.7% year-over-year for apartments, averaging $2,316

• Over two years, Ontario’s average asking rent declined 6.8%

• Toronto’s average rent: $2,592, down 2.9%, but still among the priciest

• Two-bedroom units in Toronto dropped the most: -7.0%

• East York saw a steep 13% rent drop — the highest in Ontario

• Shared accommodation rents fell 6.9% across the province; Toronto rents stayed flat at $1,233

🔍 Quick Take

Ontario’s rental market is easing for the first time in years. However, with supply tightening in the condo market and immigration expected to rebound, this affordability window may not stay open long.

🍁 📊 Maple Pulse: Condo Crashes, Sticky Inflation & Legal Lessons: Canada’s Housing Reality Check

From tumbling condo sales to policy stumbles and courtroom lessons, most of this month’s housing headlines reveal where Canada’s market is breaking—and where resilience may quietly be building. Here’s all that we’re tracking:

GTHA Condo Market Slumps to 35-Year Low: New condo sales in the Greater Toronto Hamilton Area have plummeted 54% year-over-year, marking the weakest performance in over three decades, according to Urbanation. A record 18 projects (4,040 units) were cancelled in 2025 so far, with more likely on the chopping block. Construction activity has sharply declined, with only two new projects breaking ground in Q3. Despite the slump, experts warn the current slowdown could lead to a supply crunch in the future, potentially reigniting the market. Price gaps between new builds and resale units are also dampening developer competitiveness. (Ron’s take: This is a story that regular readers of this newsletter are well aware of. The Condo market has fallen off a cliff. We’ve covered this several times before. The reason to add it again here, was not just the eye popping first half stat of condo sales plummeting by over half this year. It was about the second part which said the current slowdown in new builds particularly could lead to a supply crunch in the future reigniting the market. Smart investors and savvy homebuyers, you seeing this?)

Despite Sticky Inflation, Economists Still Expect One More BoC Rate Cut: September’s hotter-than-expected inflation (2.4%) complicates the Bank of Canada’s next move, but most economists still anticipate a 25-basis-point cut on Oct. 29, bringing the rate to 2.25%. While core inflation remains above 3%, rising unemployment (7.1%) and weakening economic signals give the BoC room to ease. Experts from CIBC, TD, and RBC agree: the data is mixed, but not alarming enough to halt another cut. However, future rate drops beyond October may be limited unless inflation trends down and fiscal policy shifts after November’s federal budget. (Ron’s take: Yes, that pesky inflation really doesn’t want to go away. Despite the higher than expected print of inflation last week, experts are still predicting a rate cut by Bank of Canada next week. We cautiously agree. Bank of Canada has given enough indications that they are going to cut rates further, and the higher inflation print most likely isn’t enough to offset the other problems of unemployment, and general weaking of the economy.)

Big Banks Split on 2026 Rate Outlook as Inflation Lingers: Canada’s major banks are divided on where interest rates are headed in 2026. While most agree modest cuts will continue through late 2025, forecasts vary sharply beyond that. RBC and BMO expect rates to stay low (2.25% and 2.00%, respectively), but Scotiabank sees hikes returning by late 2026, citing persistent inflation. Bond markets suggest long-term yields may have bottomed, signaling limited relief for fixed mortgage rates. Analysts expect variable rates to dip further, but fixed rates could edge higher in 2026 due to risk premiums—potentially reaching 5.2% on 5-year terms, even as the BoC rate bottoms at 2.25%. (Ron’s take: Adding this here, mainly for the fans of variable rate mortgages. As can be seen by this report, even the major banks with all their resources are not sure of what the future lies and when Bank of Canada might have to start increasing rates again. Therefore, unless there is absolute clarity and certainty in a borrower’s mind preferably after taking expert advise, please be careful in choosing variable rates. This is particularly relevant to first time buyers who are only now entering the market.)

Federal Records Reveal Deepening Housing Affordability Crisis in Canada: New federal briefing documents warn that housing affordability in Canada is deteriorating, with middle- and low-income households struggling amid rising costs and insufficient supply. Toronto is on pace for its lowest housing starts in 30 years, and construction costs are up 58% since 2020. The federal government admits it's fallen behind on building below-market housing, with just 4% of homes meeting that standard—well below the OECD average. Ottawa plans to launch a new Build Canada Homes agency to accelerate construction and modernize the sector, but affordability pressures and homelessness continue to rise across the country. (Ron’s take: Missed this article from last month, but it was important enough to still get highlighted here. The Govt’s own internal documents have shown that construction costs are up 58% since 2020. That’s insane! No wonder the Housing minister is now talking of prices needing to fall, by which he was referring to construction costs, mainly. Let’s see what the govt. does when they come up with the budget early next month. Will be watching it closely for housing and real estate related policy changes.)

When a “Minor” Change Breaks a Deal: Court Sides with Ontario Home Buyers: A judge ruled that Kitchener homebuyers were justified in walking away from a deal after sellers altered the offer by adding a new schedule without buyer approval. Though the change seemed minor, the court deemed it a counter-offer—not a binding agreement. Since both parties never signed the exact same contract, the original deal was void. The sellers lost $25,000 on resale and were ordered to cover legal costs. The case highlights a key legal principle: any change to an offer, even a standard form, must be mutually agreed upon for a deal to be binding. (Ron’s take: This one might seem like an obvious outcome if someone were to tell you about it. Judge threw out a case where the home buying contract was signed, but the sellers added another Schedule which the buyers never signed. But the lessons from it are important to understand. If you’re a home buyer or seller you have to be very clear when the offer is becoming firm. And it’s always best to have everything checked and rechecked with a good real estate lawyer.)

Mortgage Mastery: How Economic Policies Shape Canada and Ontario’s Mortgage Market

Economic decisions made in Ottawa and Queen’s Park ripple through every corner of Canada’s housing market — from interest rates to construction cranes. As 2025 unfolds, borrowers, lenders, and real estate professionals in Ontario are watching closely as new fiscal, monetary, and housing policies reshape affordability, access to credit, and market confidence.

1️⃣ Monetary Policy & Rate Movements

• The Bank of Canada’s September 2025 rate cut to 2.50 % (from 2.75 %) marks a cautious shift toward easing.

• Variable-rate borrowers and those with HELOCs are seeing early relief as prime lending rates adjust downward.

• Yet, roughly 60 % of mortgages are renewing in 2025–26, many at higher fixed rates — creating “payment shocks” of 10 % + on average.

• The overall takeaway: short-term relief for some, but sustained pressure for renewers.

2️⃣ Fiscal & Housing Supply Policies

• Bill C-56 removes GST on new purpose-built rentals, a boost for developers and long-term affordability.

• Ontario’s Cutting Red Tape, Building Ontario Act accelerates approvals for garden suites, laneway homes, and basement apartments.

• Meanwhile, federal and provincial programs continue to encourage higher-density construction and faster permitting.

3️⃣ Ontario’s Market Reality

• The province’s interest costs hit $16 billion this fiscal year, limiting fiscal flexibility.

• GTA home prices remain subdued, with cautious buyer demand and longer sales cycles.

• Some lenders, including BMO, have tightened underwriting for higher-risk sectors amid trade and employment uncertainty.

🌀 Meme Moment: “Reverse” Psychology?

Looks like someone misunderstood the term reverse mortgage… Sadly, it's not like reversing your car out of a bad decision. (Though we do recommend parking your questions with a qualified broker first 😉)

In a world full of stress, don’t let negativity win. Stay focused, stay kind, and stay winning.