?? Homebuying Confidence on the Rise Despite Recession Concerns

Even as nearly half of Canadians (47%) brace for a possible recession in 2025, optimism in the housing market is gaining ground. According to the Bank of Canada’s Q4 Canadian Survey of Consumer Expectations, homebuying intentions are climbing. The survey reveals that 22.4% of respondents see a greater than 50% chance of moving to a new primary residence within the next year—up from 21.1% in the previous quarter. ?? Renters are also joining this trend, with 19.9% considering a home purchase, compared to 16.9% last quarter. On the selling side, 13.5% plan to sell their home within the next year, a notable increase from 11.4% in Q3.

These findings reflect improving consumer financial sentiment bolstered by recent interest rate cuts and expectations of further reductions. ?? The survey indicates that easier credit conditions are a driving factor, with more Canadians feeling confident about their ability to buy or refinance a home. However, timing remains uncertain—those planning to buy in the next year estimate only a 50% probability of following through with their plans. ?? However, 58% of respondents remain uncertain about the economy’s direction, citing global issues such as trade tensions with the new US administration as key concerns.

?? Cautious Optimism in Business Outlook

The Bank of Canada’s Q4 Business Outlook Survey reflects cautious optimism as businesses adapt to easing interest rates and slowing inflation. While demand for discretionary goods remains soft due to earlier rate hikes, firms are beginning to see signs of recovery, particularly in the energy sector. With a 4% rise in 2024-25 capital expenditures and a 5% production increase expected, the oil and gas industry is driving much of this optimism.

Outside energy, investment plans remain modest as many firms report excess capacity and trade uncertainties tied to the new US administration. On the bright side, wage and input cost growth is slowing, allowing businesses to restore margins cautiously. Inflation expectations have stabilized, with 75% of firms forecasting inflation to stay within the Bank’s 1–3% target over the next two years, a significant improvement from the prior year. While challenges like tariffs and soft consumer demand persist, the outlook suggests businesses are positioned for a measured recovery as rate cuts continue supporting the economy.

?? December Inflation Eases, Falling in Line with Consumer Expectations

In December, Canada’s inflation rate eased to 1.8%, partly driven by a temporary sales tax holiday on goods like alcohol, restaurant meals, and children’s clothing. This initiative provided Canadians with short-term relief and contributed to a broader trend of slowing inflation. Month-over-month, prices fell by 0.4%, and even when adjusted for tax effects, underlying inflation showed signs of easing ??.

This decline aligns with ongoing economic shifts. Weak GDP growth, a higher unemployment rate, and concerns over potential U.S. trade protectionism have somewhat dampened Canadian consumer confidence and business outlooks. Lower inflation is easing pressure on the Bank of Canada (BoC), which has already cut its key interest rate by 175 basis points since June. Another 25 basis points (0.25%) rate cut next week could offer further support to borrowers.

How Does This Impact Consumers and Businesses? ??

Lower interest rates mean cheaper consumer borrowing costs, making now a favourable time to explore options like mortgage pre-approvals, renewals, or refinancing ??. With shelter costs, including rent and mortgage payments, still up by 4.5% annually, these reductions could improve affordability and boost confidence in the housing market.

For businesses, the easing inflation and potential rate cuts create opportunities for reduced operational costs and improved access to capital. However, caution remains due to subdued economic activity and ongoing uncertainties, such as global trade tensions and labour market weaknesses.

Building Confidence for the Future ??

Lower inflation and borrowing costs can stimulate renewed consumer spending and business investments, driving economic recovery. Canadians are encouraged to leverage these shifts strategically by exploring mortgage options or planning for long-term growth. Aligning financial decisions with current trends ensures resilience. If you're considering your next steps, whether as a homeowner or a homebuyer, take advantage of expert advice to navigate the evolving mortgage market confidently. ???

?? The Opportunity Ahead

The latest surveys from the Bank of Canada reveal valuable insights: homebuying ?? interest is rising, and businesses are cautiously optimistic. For anyone considering a move in today’s market, now is the time to engage with a mortgage expert to better understand your options and navigate this evolving and volatile market.

With credit conditions improving and mortgage rates ?? continuing to shift, it’s essential to explore how these changes can impact your financial plans. Locking in competitive rates or preparing for future adjustments can significantly improve your chances of achieving your homeownership goals.

Whether planning to buy, sell, or refinance, taking action now could set you up for success in a rapidly changing market. With so much happening, isn’t it time to seize the opportunities in Canada’s housing market? Contact nesto mortgage experts to get started on your customized mortgage strategy today.

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?? Ready to talk strategy? Call our nesto mortgage experts today for personalized advice on navigating economic shifts. Your smart mortgage plan starts here!

?? Contact nesto mortgage experts today for tailored advice on navigating these shifting economic conditions.

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