Tariffs and low builder confidence add layers of uncertainty
Canadians are dealing with complex mortgage decisions in an environment defined by rate fluctuations, tariff pressures, and economic uncertainty, according to TD’s latest survey.
While most respondents feel informed about the mortgage process, opinions on where rates are headed remain split: 32% expect an increase, 27% anticipate a decrease, and 29% believe rates will stay the same.
Patrick Smith, vice president of product management for real estate secured lending at TD, said expert advice can help borrowers make informed choices that match their financial goals.
"With so much uncertainty around what comes next, Canadians are thinking carefully about how best to approach their mortgage," said Smith. "Expert advice can help bring clarity to that complexity, so Canadians can make confident, informed choices aligned with their needs and long-term goals."
Tariffs are also influencing borrowing plans. About 29% of Canadians have reassessed their mortgage strategies, with 31% saying tariffs have reduced their borrowing capacity and 28% reconsidering whether to take out a mortgage. Nearly 88% said having access to trusted guidance is important as they plan their next steps.
The Bank of Canada, in a July 2025 update, projected that about 60% of mortgage holders renewing in 2025 or 2026 will see higher payments. Average monthly costs could rise by 10% this year and 6% in 2026. Holders of five-year fixed-rate mortgages — roughly 40% of the market — could see increases of 15%–20%, while borrowers with variable-rate, variable-payment products may see declines of around 5%–7%.
Volatility in lending rates is adding to the challenge. Experts report that rates have moved between the low-4% and high-3% ranges in recent weeks, driven by shifts in bond yields and conflicting economic signals. Analysts warn that rates could climb again depending on domestic economic reports and US Federal Reserve policy.
Housing supply concerns compound the situation. Canada Mortgage and Housing Corporation reported that housing starts rose 4% in July compared with June, reaching a seasonally adjusted annual rate of 294,085 units, the fastest pace since September 2022. Montreal recorded a 212% year-over-year increase in housing starts, while Vancouver posted a 24% monthly rise. Toronto, meanwhile, saw a 69% decline compared with July 2024.
Despite stronger construction activity, CMHC estimates that Canada needs 430,000 to 480,000 new homes annually to restore pre-pandemic affordability. Builder confidence remains low, with the Canadian Home Builders’ Association reporting second-quarter confidence scores below 25 out of 100 for both single-family and multi-family construction.
Industry specialists advise borrowers approaching renewals to consider their flexibility and tolerance for risk. Those who actively monitor rate changes may lean toward variable options, while others may prefer the predictability of fixed terms. Personalized financial guidance, they say, remains an important tool for households managing payment adjustments and future housing plans.
