Beyond the headlines: interest rates, housing and where the economy is headed

Here are three reasons why you should listen to this episode: Learn how interest rate cuts actually affect variable and fixed-rate mortgages, and what that means for your next renewal. Understand the regional differences shaping Canada’s housing markets, including why now may be an opportunity for condo buyers. Gain practical strategies for staying financially resilient, from managing employment uncertainty to making smart spending decisions. Resources CIBC's "Smart Advice" Podcast and Website - Website | Apple Podcast | Spotify Visit CIBC for more Smart Advice Andrew Grantham: LinkedIn | CIBC Author Profile Episode Highlights [00:20] Canada’s Economic Crossroads Canadians are facing uncertainty as interest rates shift, the Canadian housing market fluctuates, and recession fears dominate the headlines. Rising costs and uneven recovery raise important questions about affordability and financial security. Host Carissa Lucreziano introduces guest Andrew Grantham, Senior Economist at CIBC Capital Markets. Andrew is well-positioned to explain today’s challenges, connecting big-picture trends to the financial decisions Canadians face.

[01:10] Interest Rates in the Canadian Housing Market The Bank of Canada and the U.S. Federal Reserve recently trimmed rates, offering a small sense of relief. For some households, variable-rate mortgages and credit lines see immediate benefits, while fixed rates remain largely unchanged. Carissa asks Andrew about the broader impact on the Canadian housing market, from overheated urban centers to smaller regions. Andrew explains why local differences matter, noting ongoing weakness in Toronto and Vancouver but signs of recovery elsewhere. [04:16] Andrew: “We are seeing that, particularly with the population growth we've seen in some of the prairie provinces, for example, there is the demand there, and even though building has increased in those provinces, we are still seeing that the housing market there is reasonably strong and prices are continuing to rise a little bit.” [04:41] The Condo Market in Focus Condos, particularly in Toronto, are experiencing weak demand and falling prices. Developers struggle to pre-sell units, slowing the pace of new construction. Andrew explains how reduced supply could eventually stabilize the market as demand slowly returns. He advises Canadians not to wait too long, as even a small rise in demand could shift conditions. [06:02] Are Canadians Waiting on the Sidelines? Many Canadians wonder if mortgage rates will fall further before they make financial moves. Andrew notes that while rates are lower than last year, they will likely not return to pandemic-era levels. He emphasizes that rates today are closer to 2019 levels, when the market was more balanced. His advice: focus on manageable payments and comfort, rather than trying to time the market. [07:40] Canada–U.S. Trade Ties and Sector Pressures Canada’s economy is deeply linked to U.S. policy decisions, creating ripple effects north of the border. Andrew discusses Mark Carney’s approach to strengthening ties while avoiding rushed trade deals. While many goods still enter the U.S. tariff-free, sector-specific tariffs continue to impact industries like steel, aluminum, and autos. Ontario and Quebec face the greatest pressure, while most other provinces remain less affected. [10:35] Consumer Spending and the Canadian Dollar With Black Friday approaching, Canadians are weighing the cost of cross-border shopping. [11:30] Andrew: “In terms of that cross-border shopping activity, a big theme over this year, even before talking about those Black Friday Sales, has been the drive to buy Canadian.” A weaker Canadian dollar makes U.S. purchases more expensive, but a “buy Canada” trend is emerging. Andrew notes that spending at home could benefit local retailers this holiday season. He explains how the loonie’s movement is tied to U.S. dollar strength, limiting expectations for quick improvement. [12:18] Is Canada in a Recessi