TD Economics’ latest card‑spending report showed that overall consumer outlays softened in January before stabilizing in February, with real spending in the first quarter tracking at about a 1.2% annualized pace.

However, the sharpest weakness sat in categories linked to homeownership and renovation, adding another headwind for brokers counting on a spring housing rebound.

Housing‑linked purchases lost momentum

“Outlays at furniture stores, home centres, and building materials retailers have declined for two consecutive months,” TD economist Maria Solovieva said, noting that spending in those categories was down 2.1% year‑over‑year in February.

She added that this pattern was “consistent with the cooling in Canada’s housing market – national home sales are tracking more than 5% lower relative to a year ago in Q1,” based on early data.

Solovieva said the broader consumer landscape remained “resilient but increasingly battle‑worn,” with essential goods holding up while “discretionary goods categories – particularly those tied to housing – are losing momentum.”

“Canadian households continue to fight one battle after another, with no intermission in sight,” she said.

The country is in the middle of a mortgage renewal wave, with the Canada Mortgage and Housing Corporation estimating that at least 1.5 million households had already renewed their mortgage by the end of 2025 and a million more are set to do so in 2026.

South of the border, mortgage rates are climbing, with the 30-year-fixed mortgage rate blowing past six per cent last week.

Generally, when investors fear inflation, that drives bond yields up and, in turn, raises mortgage rates.

“Once oil prices skyrocketed in reaction to hostilities in and around Iran, yields followed suit. This matters because lenders use bond yields to price their fixed mortgage rates,” said Clay Jarvis, NerdWallet Canada’s mortgage expert.

In Canada, fixed-rate mortgages have gone up slightly since the start of the war, said Dan Eisner, CEO of Calgary-based True North Mortgage.

“We’ve probably seen fixed rates go up by at least a quarter per cent right across the board from all the lenders,” he said.

Homeowners looking to renew their mortgage this year should be concerned about three and five-year government bond yields, Jarvis said.

“Three and five-year fixed rates edged up at a handful of lenders and brokerages over the last week or so, but not en masse and not to a nauseating degree,” he said, adding that many might still be able to find a mortgage under four per cent.

But the uncertainty around when the current crisis will abate is making it harder for households to plan their renewal, Eisner said.

It comes as national mortgage debt continues to increase and as the cost of living continues to bite into consumer bank accounts.

As of November 2025, the report states that outstanding residential mortgage debt in Canada reached approximately $2.4 trillion, equivalent to nearly 73% of national gross domestic product and representing about 74% of total household debt.

This is an increase from the $2.3 trillion in July 2024, according to Statistics Canada.

The report gathered its information from TransUnion Canada borrower credit data representing roughly 80% of all household mortgages in Canada from 2015 to 2024.

The first pattern the Bank of Canada delves into is how “about two years before becoming delinquent on their mortgage, households begin to rely more heavily on consumer credit, such as credit cards and lines of credit.”

Scott Nazareth, a senior mortgage agent at Mortgages.ca, broke down where credit utilization can become an issue.

“Typically, credit reporting agencies will recommend that your credit utilization does not exceed 33% of the limit. Once you hit the 40-50% threshold, that’s typically where the warning signs start,” he said.

In comparison to non‑delinquent cohorts, this remained stable over the same period, stating that “there is a noticeable difference in credit utilization levels between households that will default and those that remain current on their mortgage payments.”

Credit card delinquency rates were found to be up by 20%, while the “credit utilization rate rises by six percentage points on average as the mortgage delinquency event nears.”

“If you’re not paying off those balances and you’re running a balance, that’s typically the first sign that there is some financial stress,” said Nazareth.

“If you miss one payment, especially if you miss two or three payments, even if they are over the course of a year, it really shows the pattern of a downward spiral.”

“You may miss one payment, and you start to miss a couple more, and it really spikes at six months out, and that was really surprising to me,” he said.

“It’s basically like you enter into a crisis in that last half of a year.”

The Bank of Canada cites another pattern as “about one to two years before mortgage delinquency, delinquency rates on non‑mortgage credit products begin to increase.”

It was also found that credit card delinquency rates began increasing the earliest, which was followed by other credit products such as auto loans, home equity lines of credit (HELOC), lines of credit and instalment loans.

“The upward trend in both non‑mortgage delinquency and credit utilization rates intensifies as mortgage delinquency approaches.” 

In addition, the report also states that mortgage borrowers “typically hold multiple forms of credit,” as approximately 90% “have at least one credit card and more than one‑third hold auto loans or unsecured lines of credit.”

“We start looking at missed payments as the second warning sign of despair or financial stress, and that could be one to two missed payments across different cards,” said Nazareth.

“What that will also result in is a decline in options for consolidating debt because once you start missing payments, your credit score will decline.”

The last pattern the study highlights is how “about six months before mortgage delinquency, both the pace of non‑mortgage delinquencies and the growth in credit‑utilization rates pick up sharply.”

“In the final six months before a mortgage delinquency, you’ll usually start seeing many more missed payments and a higher utilization above the 40-50 per cent, maybe close to maxing out the cards, at which point is close to the feeling of drowning or sinking,” said Nazareth.

Legg also stated that “the whole report shows that this is why banks take credit scores seriously.”

“The biggest takeaways are that as soon as you start relying on credit for things like groceries or relying on credit for your mortgage, that’s the sign to talk to a financial advisor or a mortgage agent,” he said.

Almost half (46%) of Canadians have seen an increase in their debt over the last year, as more than half of those who said their debt has increased (52%) said they lost sleep over debt in 2025, while 34 per cent said it has made them physically ill.

In Canada, auto loan delinquency rates for younger drivers rose by 30 per cent on auto loans, compared to the overall rate, which saw an increase of 15.3%

It is a similar story in the U.S., as the Federal Reserve Board states that “30-day-plus delinquencies on credit card balances have risen steadily since late 2025, crossing levels last seen before the pandemic stimulus era.”

Higher minimum payments and interest rates are also above 20% for many cardholders.

But that tariff dispute, which has proven hugely impactful on the national housing market and homebuyer confidence, could face a day of reckoning by July 1.

That’s the cutoff point for review of the Canada-US-Mexico Agreement (CUSMA), a wide-ranging trade deal struck between the three North American allies that’s protected many Canadian industries and exports from the tariff wave Trump launched last year.

The current US tariffs exempt exports covered by CUSMA, meaning Canada has been spared much deeper trade pain – even if the tariffs have battered other sectors like steel, aluminum and automobile manufacturing.

Economists have long flagged the enormous significance of the looming CUSMA review, whose outcome could shape the outlook for Canada’s housing market and wider economy for the remainder of the year.

Those negotiations, and the prospect of Trump suddenly walking away from the deal, make it far more noteworthy than last week’s Supreme Court decision, according to Servus Credit Union chief economist Charles St-Arnaud (pictured top).

“We have bigger concerns coming up this summer with the review of CUSMA,” he told Canadian Mortgage Professional when asked on the possible impact of Friday’s decision. “That will be more consequential in terms of what’s going to happen with tariffs.”

Exemptions have cushioned the blow of Trump’s trade war

Canada’s economy isn’t exactly booming, and certain industries have staggered under the weight of Trump’s tariff regime.

But its condition would be far worse, St-Arnaud pointed out, if it wasn’t for the wide-ranging CUSMA exemptions the Trump administration introduced last year.

“We’re doing OK – not great,” he said. “We need to put it in terms of context. If we compare to where we thought we would have been a year ago, we’re in much better shape. But it’s still not great. It seems like the economy is really at a standstill.

“In terms of growth, in terms of domestic demand, it’s still sluggish. We’re hoping for some improvement in 2026, but it will remain kind of a modest improvement in terms of economic activity this year.”

Hopes of a Canadian housing market recovery in 2025 were dashed when Trump announced his tariff plans, plunging the economy into uncertainty and keeping would-be homebuyers on the sidelines amid fears of job losses and an economic downturn.

Construction mortgage loans are an entirely different ball game than typical residential mortgages. Before you take a swing at building your own home, it’s important to know the rules.

What is a construction mortgage?

A construction mortgage, sometimes referred to as a builders mortgage, is a way to fund the purchase of a home that may not exist yet. A construction mortgage can be used whether you’re building a property yourself or purchasing a custom-built home from a developer.

(Some lenders may use the terms “construction mortgage” and “builder’s mortgage” interchangeably, while others consider them distinct types of loans.)

Like a residential mortgage, a construction mortgage loan requires a down payment and can come in fixed or variable-rate options.

In some cases, a construction loan will automatically convert to a traditional mortgage once building is complete and a certificate of occupancy has been obtained.

How a construction mortgage works in Canada

The main difference between a construction mortgage and a more traditional type of mortgage is the way the funds are paid out.

Unlike a typical mortgage, which is paid as a lump sum on closing day, a construction mortgage is paid out in smaller increments, or “draws,” as each phase of construction is completed.

While a construction loan is in the draw phase, some lenders may only require you to pay interest on the amount borrowed. Once construction is done, payments of both principal and interest will be required.

When financing a build with a construction mortgage, inspections are required at each step before the next draw will be approved. The borrower is generally responsible for the cost of these inspections, although some banks may deduct the progress and inspection fees from each draw.

Sample draw schedule for a construction mortgage

How to get a construction mortgage

Construction mortgages are not as widely available as mortgages to purchase an existing home. It may be harder to find a construction mortgage offered by smaller lenders, such as credit unions, or in certain provinces.

Progress draw construction mortgages are also more complicated and require a lot of steps and checks along the way. For this reason, it’s wise to find a mortgage broker or bank that is familiar with this type of mortgage and can guide you through the process and explain all the steps.

Since construction mortgages do come with more risk, you may have to meet stricter requirements to get approved. This goes beyond the typical minimum credit score and reliable income that is required for a traditional mortgage.

Lenders also need to be assured that the project will be completed within a certain time frame and that the builders are licensed and have a history of well-built homes, among other things. A larger down payment, like 25% to 30% of the total mortgage amount, may be required to be approved for a construction mortgage.

Examples of construction loan providers in Canada

“We don’t see the Bank of Canada moving at all,” CIBC economist Benjamin Tal told Yahoo Finance Canada in an interview. Mortgage rates, he adds, are likely at the lowest they will go.

That’s a far cry from a year ago, when further cuts were expected, mortgage rates were assumed to be on the decline and trade wars and related economic uncertainty — stemming from the policies of U.S. President Donald Trump — were still hypothetical.

Yahoo Finance Canada spoke with experts ahead of today’s BoC hold about how Canadians should handle different real estate scenarios in a year where rates, sales and prices are expected to remain more or less static. Their guidance, however, comes with a key caveat: trade disputes are no longer hypothetical, with U.S. unpredictability the wild card as the review of the Canada-U.S.-Mexico Agreement (CUSMA) nears.

“If we are all wrong and there’s going to be a major trade dispute… that’s something that will be recessionary for the Canadian economy and then all bets are off,” Tal noted.

First-time buyers: Time is finally on your side

The psychology of the market has shifted significantly. Asking rents in many markets remain high, but national average rents hit a 30-month low in December. That, coupled with high inventory and low expectations for price movement, takes much of the urgency away.

“People are not rushing and that’s a good thing,” Tal said. “That’s a normal market as opposed to a market that was panicking until very recently.”

This patience is vital in the condo sector, where a glut of inventory, most prominently in the Greater Toronto Area, has created a buyer’s market that demands strategic thinking. While prices in some markets may decline further in 2026, Royal LePage CEO Phil Soper advises buyers to factor that equity erosion into their offer. “It’s not hard math. It’s a little bit of spreadsheet work.”

“The window of refinancing is closed because prices… are actually lower than they were in 2021,” Tal said.

Sellers: Be realistic

Steve Ng, a Vancouver-based senior district manager and mortgage specialist at TD, notes that sellers’ perspectives often lag the market, with a fixation on property assessments that quickly become obsolete.

“You’re always thinking, ‘I could have got this, I should have got this, and maybe I still can get this,’” he said. “But the market is shifting.”

Ng notes that multiple offers are rare and financing conditions, once a deal-breaker, are now standard practice. “Now, we’re seeing conditional offers of 10 to 14 days,” Ng said. “The conditions have changed a little bit, and obviously in favour of the buyer.”

He warns that sellers chasing yesterday’s prices risk getting stuck with a stale listing for “six, eight, nine months,” bleeding money on utilities and taxes that eat into any eventual profit. Soper’s advice is to trust your broker and price for a clean exit.

“Price to market or you’re just going to make yourself miserable,” Soper warned. “The market is what the market is.”

Renewals: Explore your options. Early.

Although the BoC is expected to hold rates, Tal warns that 2026 is “the real test” compared to 2025. Borrowers who bought in 2021 are renewing into a market where their home might be worth less than what they paid, removing the safety valve of refinancing that saved many in 2025.

“Close to five per cent of all mortgages in Canada are going to face more than 40 per cent increase in mortgage payments,” Tal noted. “That’s not insignificant.”

In this environment, letting your mortgage auto-renew is a financial hazard. Ng advises borrowers to act aggressively, locking in a rate 120 days in advance. His warning is technical but critical — fixed mortgage rates track bond yields, not the BoC. Tal notes five-year fixed mortgage rates could begin to climb in the second half of 2026 as the bond market anticipates the BoC hiking rates in 2027.

“The recent enthusiasm for variable-rate mortgages may wane in 2026, especially if borrowers start anticipating new rate increases,” Hendrix Vachon, principal economist at Desjardins, said in a report.

Canadians have typically preferred five-year fixed mortgages, but he said variable options “have been gaining in popularity from 2024 onward,” estimating they made up 38% of new mortgage financing in October and 32 per of the total outstanding mortgages based on Bank of Canada data.

The BoC has lowered its policy rate by 275 basis points since June 2024, taking it from five per cent to 2.25 per cent. Mortgage rates have followed: fixed-rate borrowing has fallen sharply from mid-2024 highs, and variable rates have recently dropped lower than fixed rates.

Yet, according to data from the Canadian Real Estate Association, sales activity and average prices are more or less even with where they were in early 2024.

“This Bank of Canada rate has come down massively from its peak,” said Ron Butler, a broker at Butler Mortgage. “Sales are still terrible, and prices keep coming down. It’s definitely a massive piece of the narrative, but [the BoC] doesn’t control the market at all.”

CIBC deputy chief economist Benjamin Tal says the housing market “actually hasn’t responded” to the deep interest rate cuts, “and I think that it’s not just about interest rates.”

The cuts, he says, kept Canada out of recession, but were overwhelmed by broader economic forces. “The economy as a whole is still struggling. The fog of uncertainty regarding Trump is a major factor impacting the psyche of the consumer.”

Even if the BoC were inclined to cut again in the future — something analysts widely doubt — Tal says the traditional link between cheaper borrowing and housing demand has weakened. “Interest rates are secondary here,” he said.

Stuck between lower rates and deeper fears

Butler, Tal and others describe a market defined by caution: prices drifting lower, sales volumes subdued, and no sense of urgency on either side of the transaction. National benchmark prices are still below where they were when the easing cycle began. Some of the heaviest declines have been in entry-level segments like condos and townhouses.