Bank of Canada Holds Interest Rate as Housing Market Stalls Under Trump Tariff Uncertainty

The Bank of Canada’s decision to hold its interest rate steady does little to boost a housing market already grappling with economic anxiety and uncertainty sparked by U.S. President Donald Trump’s trade tariffs.

On Wednesday, the Bank of Canada (BoC) opted to maintain its interest rate at 2.75%, a move widely anticipated by financial analysts following recent inflation data. Yet for Canada’s struggling housing market, the decision may prove largely inconsequential, as deep uncertainty driven by U.S. President Donald Trump’s tariff threats continues to freeze activity.

“All the buyers are on the sidelines because of the uncertainty,” explained Kingsley Ma, area vice-president at RE/MAX Canada. “If you can’t pay the bills, it doesn’t matter what the interest rate is.” His concerns reflect a broader market sentiment: potential homebuyers are hesitating—not because of the rate itself—but due to job insecurity and fears about economic stability.

Kelly Ho, a certified financial planner at DLD Financial Group, echoed these views, noting that even with rate stability, high mortgage costs and uncertain incomes have made buyers cautious. “If there’s uncertainty about the ability to pay sizeable mortgages, then that throws everything up in the air,” Ho said.

According to Ron Butler of Butler Mortgage, the current market primarily consists of wealthy buyers who are insulated from economic shocks. “We see very, very little of what you would call average people purchasing homes,” Butler remarked.

Data released Tuesday by the Canadian Real Estate Association (CREA) supports these observations. March home sales dropped 4.4% from February and were down 9.3% from the same period in 2024—the lowest March numbers since 2009. The slowdown was most pronounced in British Columbia and Ontario, and CREA notes a general downturn in nearly all regions nationwide.

“In short order, we’ve gone from a slam dunk rebound year to treading water at best,” said CREA’s senior economist, Shaun Cathcart. CREA has now revised its 2025 sales projection to 482,673 homes, aligning with 2024’s total and marking a significant drop from the 8.6% annual growth forecast made in January.

Even the BoC’s previous rate cut in March failed to stimulate the housing market. Ma noted that activity remained sluggish despite the rate reduction, with economic uncertainty overshadowing monetary policy decisions. A minor boost in the stock market came after Trump announced a 90-day pause on reciprocal tariffs, but experts suggest this temporary measure is unlikely to restore buyer confidence.

For homeowners facing mortgage renewals, however, the rate pause may offer a small silver lining. “Those who were initially nervous about their upcoming renewals are no longer nervous,” Ho said, pointing to expectations of continued rate stability or gradual declines.

BoC governor Tiff Macklem recently emphasized the challenge of forecasting in such an unpredictable environment. Speaking in Calgary, he said the Bank would shift focus from fixed economic projections to navigating a range of plausible outcomes due to “pervasive uncertainty.”

As the spring season begins—a typically busy time for real estate—industry experts predict the market will remain subdued. While interest rates may stay level or even drop slightly, the true barrier remains widespread anxiety over trade, employment, and financial security.

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