Canadian mortgage renewals will weigh on economic growth: Deloitte

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this is the soft Landing scenario it’s always been a narrow path and we have yet to fully stick The Landing the head of Canada’s Central Bank says we’re on track for a so-called soft Landing slowing the economy to tame inflation without steering us into a recession and spiking unemployment inflation is not yet 2% but it is a lot closer and with further and sustained easing and underlying inflation in recent months we are more confident that inflation will continue to move closer to the Target a new forecast from deoe the world’s largest Professional Services firm also sees a soft Landing for Canada the economy narrowly dodged a technical recession in the last half of 2023 and is showing strength this year enough to Warrant a couple of rate Cuts deoe forecasts that the central bank’s Benchmark interest rate will end the year at 4.25% with more Cuts next year to bring it to 2.75% by the end of 2025 now that will bring Financial relief for many households and businesses managing variable rate debt payments but according to Dee’s Chief Economist it won’t come soon enough to Stave off a fresh wave of financial pain as households that secured ultra low interest rate mortgages during the pandemic face renewal there’s still a large percentage of Canadian mortgage holders that are going to have to renegotiate their mortgages and these are the people who really benefited significantly from the rate reductions but when we look forward they are also the group that are going to be really facing much higher interest costs that’s expected to weigh on economic growth next year deoe also warns there are pain points on the horizon weak business investment in Canada’s productivity problem pose risks to Canada’s long-term economic resilience an gaviola Global News Toronto

Deloitte Canada’s latest economic outlook suggests that the pace of interest rate cuts is expected to increase in 2025, but this may not be sufficient to shield many Canadian homeowners from the impact of impending mortgage renewals.

The forecast, released on Wednesday, predicts a 1.2 per cent growth in the overall real gross domestic product for 2024, slightly higher than the previous estimate of 1.0 per cent. However, Deloitte Canada has revised its expectations for 2025, now projecting a growth of 2.6 per cent as opposed to the previously anticipated 2.9 per cent.

Global’s Anne Gaviola has more on what the world’s largest financial services firm sees on the horizon for the Canadian economy and household budgets.

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29 COMMENTS

  1. Houses are still artificially high. It's not right first-time homebuyers needs parents to get into the market. The housing market is so broken. Let's start by forcing all current foreigners to park their money somewhere else within one year (fail to do so, automatic auction sale) and make residential properties for Canadians only, Ban mortgages/HELOCS on 2nd properties, House sold within 3 years will be taxed 100%, income verification using income tax assessment directly from the CRA. Interest rates should never be below 5% as it is low. Lower than that is extremely low.

  2. Says who? Trudeau and Freeland keep telling us, Canadians are filthy rich and Canadian economy is burning hot. Certainly Canadians can afford a little more mortgage payments

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