Many homeowners—especially those without a mortgage broker—don’t fully understand mortgage penalties. And I get it! Financing a home can be overwhelming. But if you’re considering refinancing, selling, making a lump sum payment, or need a way out, read this first.

The most common mortgage penalty my clients encounter is a prepayment penalty. Did you know? Your lender doesn’t want their money back early! That’s because they earn guaranteed interest on the loan, helping them not only budget but also profit. Let’s go over the types of prepayment penalties:

Prepayment or Overpayment: If you make a lump sum payment on your mortgage or increase the regular payments by too much, you could be outside the terms of your mortgage agreement.

Transferring: If you move your mortgage to another lender before the end of your term, that is considered breaking the mortgage agreement you made.

Early Re-Payment: If you sell your home and pay off your lender with the proceeds, leaving you without a mortgage, that also breaks the agreement.

Breaking your mortgage for these—or any other reason—almost always results in financial penalties. The amount of the penalty that could be owed will be based on a few factors:

• The amount of pre- or over-payment
• Interest rates (existing and new)
• The type of mortgage (open, closed) and the type of rate (fixed, variable)

How can you reduce or avoid prepayment fees?

The simplest answer is to wait until the end of your existing term to make changes. If that’s not possible, let’s review your circumstances:

• Do you have a fixed or variable rate? If you have a variable rate and you’re breaking the mortgage in favour of a fixed option, first check to see if you can lock in a rate under your existing terms
• Are you making a lump-sum payment? Review the terms of your mortgage to see what your annual prepayment allowance is. Most mortgages will let you make some fixed lump sum payments without any penalties

Penalties for non-payment

There’s also a flip side to penalties, which involves incurring a penalty because you’re making a late payment or missing payments.

You won’t be surprised that any payment received after the due date will incur a fee. Lenders will also report the missed payment to the credit bureau, which will impact your credit score. Before you miss a payment, the best thing you can do is to notify your lender (especially before it happens) and let them know. You can work together to defer a payment, skip a payment, or make other alternative arrangements.

If you’re with a lender that offers it, consider taking a ‘mortgage payment holiday’ and either skipping or deferring payments for a specific amount of time. Some lenders allow up to 3-6 months or possibly longer, depending on the circumstances.

If you have already missed a payment, you should make up that late or missed payment as soon as possible to avoid a quickly escalating situation.

When can penalties be worthwhile?

It is important to note that sometimes, paying a penalty can be worthwhile—especially if you’re locked into a higher-rate mortgage and the savings from breaking it and securing a lower rate outweigh the penalty costs. I can help you with this determination! I can help you determine if this makes financial sense for you.

An alternative to mortgage penalties

If you’re likely to break your mortgage agreement, consider an open mortgage. This is a great short-term solution for anyone who has an inheritance coming up, is planning a move out of town, or perhaps getting married (or divorced) and planning to combine (or separate) assets. You regularly pay the mortgage as long as you need it, but when you sell the property—no worries. This option does typically come with higher rates, but the benefit is that there are no penalties to pay it off at any time.

Whatever type of mortgage penalty you might be facing, my best recommendation is to talk to me for expert advice. Do this before you make any commitments so we can go over the fine print and you can understand what you’re getting into! I always take the time to do this with my clients, and I would be happy to assist you also.

With Canada’s recent federal election resulting in a Liberal minority government, you might be asking what this means for real estate.

Liberal Housing Promises That Matter

The Liberals pledged to double housing construction to 500,000 homes annually, eliminate GST on new homes under $1M for first-time buyers, and reduce construction red tape. But remember—minority governments need cooperation to deliver.

Interest Rates Are Heading Down

The Bank of Canada’s rate sits at 2.75% (down from 4% last year), with experts predicting further cuts to around 2.25% by year-end. On a $500,000 mortgage, each 0.25% cut saves you roughly $75 monthly. Don’t expect pandemic-era rock-bottom rates, though.

Current Market Reality

The market has cooled significantly:

• Average Canadian home price: $678,000 (down 3% year-over-year)
• Sales volume down 8%
• Available listings up 18%

This has created regional differences: Alberta and Saskatchewan remain seller’s markets, while Ontario and BC (especially urban areas) favor buyers.

What This Means for You

Buyers: More options and less pressure, but don’t hold your breath for massive price drops.

First-time buyers: The GST exemption could save you $40,000 on an $800,000 new build, but mortgage qualification remains strict.

Sellers: Be realistic with pricing, especially in competitive markets.

Investors: Rental demand remains strong (vacancy rates below 2% in major cities), but watch for potential new regulations.

Looking Ahead

Short-term (2025): Expect flat or slightly declining prices (around -1%).

Medium-term (2026): If rates continue dropping and the economy improves, modest growth of 3-5% is likely.

The promised housing supply increase won’t materialize overnight. Combined with economic uncertainties (including U.S. trade tensions), we’re looking at a measured, region-specific market recovery.

My advice? This transitional market offers opportunities for well-prepared buyers and realistic sellers. Let’s talk about how these changes affect your specific situation.

Need personalized mortgage advice in this changing market? Contact me for more info. 

The Bank of Canada held its benchmark interest rate unchanged at 2.75% at last week’s meeting, as expected by half of the market, to mark the first hold following 225 basis points of cuts in seven consecutive decisions. The governing council noted that the unpredictability of the magnitude and duration of tariffs posed downside risks to growth and lifted inflation expectations, warranting caution regarding the continuation of monetary easing.

The higher uncertainty stemmed from the United States’ lack of a clear tariff path, prompting the BoC Governing Council to present two economic scenarios in its latest Monetary Policy Report. Should the US limit the scope of its tariffs on Canada, the BoC expects growth to temporarily weaken and inflation to hold near the 2% target. Should the US proceed with an all-out trade war with Canada and China, the BoC has pencilled in a recession this year, and inflation rising temporarily above 3% next year.

Of course, as the Bank stated in its press release, “Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented.”

The statement says, “Serial tariff announcements, postponements, and continued threats of escalation have roiled financial markets. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada’s exchange rate has recently appreciated as a result of broad US dollar weakness.”

The Bank says in these very unusual times, “In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.

Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January Monetary Policy Report (MPR). The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer-term inflation expectations are little changed.

Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well-controlled.

The Governing Council will proceed carefully, paying particular attention to the risks and uncertainties facing the Canadian economy. These include the extent to which higher tariffs reduce demand for Canadian exports, how much this spills over into business investment, employment, and household spending, how much and how quickly cost increases are passed on to consumer prices, and how inflation expectations evolve.

Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.”

Bottom Line

The US is determined to impose worldwide tariffs, disproportionately hitting Canada, Mexico, and China, the US’s top trading partners. This is a misguided neo-Mercantilist policy. Mercantilism assumes that the global economic pie is fixed, so if one country prospers, another must fail. This idea of a zero-sum game was debunked in the 18th century by Adam Smith and others who showed that if countries have a competitive advantage in various products and services, all are better off by producing and trading those products with the rest of the world. It is not a zero-sum game. The economic pie grows with trade. This was the idea behind globalization and the USMCA free trade agreement.

Given Canada’s vulnerability to tariffs, the economy will suffer more than the US, which has a relatively closed economy (where exports are a small proportion of GDP). Prices will rise depending on the duration and size of the coming tariffs, but mitigating the inflation will be the weakness in economic activity. Stagflation, a buzzword from the 1970s, is back in the lexicon.

We expect the BoC to resume cutting the policy rate in 25-bps increments until it reaches 2.0%-to-2.25% this summer, triggering a rebound in home sales. Layoffs and spending cuts will dampen sentiment, but lower interest rates will bring buyers off the sidelines. Housing inventories have risen sharply with new condo supply and a marked rise in the new listings of existing homes, and home prices are falling.

As you enter retirement, financial stability may be at the top your mind. Whether you’re looking to cover unexpected expenses, help family members, or simply enhance your lifestyle, having access to additional income can make a difference. For Canadian homeowners aged 55 and better, a Reverse Mortgage can provides a smart, flexible way to access tax-free cash from your home’s equity.

How Does A Reverse Mortgage Work?

A Reverse Mortgage allows you to unlock up to 55%¹ of the value of your home without the need to sell or move and unlike a traditional loan, there are no monthly mortgage payments required.

Three Ways You Can Use Your Home Equity

1. Protect Your Retirement Savings
   Many retirees rely on their RRSPs, TFSAs, or other savings to manage expenses. However, withdrawing large amounts can lead to hefty taxes and diminish long-term retirement funds.  With a Reverse Mortgage, you can access tax-free cash from your home equity, preserving your savings and allowing your investments to continue growing.

• Manage Debt and Unexpected Costs
  Whether it’s high-interest credit card debt or unplanned medical expenses, managing financial surprises in retirement can be stressful. A Reverse Mortgage gives you the flexibility to pay off existing debts by consolidating the debt or handle unforeseen costs without affecting your monthly cashflow or budget that you may have set for yourself.

• Live Retirement Your Way
  Retirement is your time to enjoy life. Whether it’s traveling, renovating your home, or helping your children and grandchildren, a Reverse Mortgage gives you the financial freedom to make the most of your retirement – on your terms.

Why Choose A Reverse Mortgage?

• No Monthly Payments Required: Focus on enjoying retirement without worrying about monthly mortgage payments.
• Stay in Your Home: A common misconception about reverse mortgages is that the bank takes ownership of your home—but that’s not true. With a Reverse Mortgage, you get tax-free cash based on your home’s value, while you remain the owner. You’re simply responsible for property taxes and upkeep. According to an Ipsos survey conducted on behalf of HomeEquity Bank, 93%² of Canadians want to age in place, staying in the home they love.

• Tax-Free Cash: Because you are unlocking home equity, the funds received from a Reverse Mortgage are not added to your taxable income and do not affect government benefits such as Old Age Security (OAS).
• No Negative Equity Guarantee:  Reverse Mortgages from Home Equity Bank have a No Negative Equity Guarantee³, which means that if you meet your property taxes and mortgage obligations, they guarantee that the amount owed on the due date will not exceed the fair market value of your home. If the house depreciates and the mortgage amount owing is more than the gross proceeds from the sale of the property, they cover the difference between the sale price and the loan amount.

Is a Reverse Mortgage Right for You?

If you want to enhance your retirement lifestyle while staying in the home, you love — without dipping into your savings — a Reverse Mortgage could be a potential solution for you. To explore how you can access tax-free cash through your home’s equity, contact me to learn more.

¹Some conditions apply.

²Survey conducted by Ipsos on behalf of HomeEquity Bank April 12-16, 2022

³As long as you keep your property in good maintenance, pay your property taxes and property insurance and your property is not in default. The guarantee excludes administrative expenses and interest that has accumulated after the due date

Today’s Labour Force Survey for March was weaker than expected. Employment decreased by 33,000 (-0.2%) in March, the first decrease since January 2022. The decline in March followed little change in February and three consecutive months of growth in November, December and January, totalling 211,000 (+1.0%).

The employment rate—the proportion of the population aged 15 and older—fell 0.2 percentage points to 60.9% in March. This partially offsets an increase of 0.3 percentage points observed from October 2024 to January 2025.

Private sector employment fell by 48,000 (-0.3 %) in March, following little change in February and a cumulative increase of 97,000 (+0.7%) from November 2024 to January 2025. On a year-over-year basis, the number of employees in the private sector was up by 175,000 (+1.3%).

Public sector employment was little changed for a third consecutive month in March, up 92,000 (+2.1%) compared with a year earlier. Self-employment was also little changed in March, up 81,000 (+3.0%) on a year-over-year basis.

Economists expected the trade war to weigh on the Canadian labour market in March. Market participants expected zero employment gains as steel & aluminum tariffs hit jobs in the sector. While we haven’t seen broad-based layoffs yet, automaker Stellantis NV temporarily halted production at assembly plants in Windsor, ON and Mexico, laying off 3,200 people in Canada, 2,600 in Mexico and 900 at six U.S. factories. The pressure from those and broader non-USMCA-compliant tariffs was expected to drive stagnant job growth in the month. At 6.7%, the jobless rate met expectations, still two ticks shy of November’s cycle high.

Employment could experience a further downside over the coming months, depending on how the tariff backdrop evolves. Average hours worked could see an even bigger hit as work-sharing programs come into effect due to pressure on manufacturing production.

The unemployment rate rose 0.1 percentage points to 6.7% in March, the first increase since November 2024. It had trended up from 5.0% in March 2023 to a recent high of 6.9% in November 2024 before falling by 0.3 percentage points from November 2024 to January 2025 in the context of robust employment growth at the end of 2024 and in early 2025.

Since March 2024, the unemployment rate has remained above its pre-COVID-19 pandemic average of 6.0% (from 2017 to 2019).

In total, 1.5 million people were unemployed in March, up 36,000 (+2.5%) in the month and up 167,000 (+12.4%) year over year.

Among those unemployed in February, 14.7% became employed in March. This was lower than the corresponding proportion in March 2024 (18.6%) (not seasonally adjusted).

Long-term unemployment has also risen; the proportion of unemployed people searching for work for 27 weeks or more stood at 23.7% in March 2025, up from 18.3% in March 2024.

Total hours worked rose 0.4% in March, following a decline of 1.3% in February. On a year-over-year basis, total hours worked were up 1.2%.

Average hourly wages among employees were up 3.6% (+$1.24 to $36.05) year over year in March, following growth of 3.8% in February (not seasonally adjusted)

Wholesale and retail trade employment fell by 29,000 (-1.0 %) in March, partly offsetting an increase of 51,000 in February. On a year-over-year basis, the number of people working in wholesale and retail trade was little changed in March.

Following five months of little change, employment in information, culture, and recreation decreased by 20,000 (-2.4%) in March. Despite the decline, employment in this industry changed little on a year-over-year basis.

In March, employment also fell in agriculture (-9,300; -3.9%), while there were gains in “other services” (such as personal and repair services) (+12,000; +1.5%) and in utilities (+4,200; +2.8%).

Bottom Line

US employment data for March were also released this morning. In direct contrast to Canada, US job growth beat forecasts in March, and the unemployment rate edged up, pointing to a healthy labour market before the global economy gets hit by widespread tariffs.

Canada’s job market stalled in March, shedding the most jobs in over three years. The job loss was the first in eight months, with trade-exposed sectors driving some declines.

The threats and implementation of US President Donald Trump’s tariffs and Canada’s retaliating levies have weighed on the Canadian jobs market over the past two months. However, with the country dodging the latest round of so-called reciprocal tariffs this week, the Bank of Canada may have more time to weigh economic weakness against rising price pressures.

Stocks have fallen the most since March 2020–the beginning of Covid, and bonds are rallying causing market-driven interest rates to drop precipitously. The Bank of Canada meets again on April 16. The day before, Canadian inflation data for March will be released. This will be a crucial report as the central bank assesses the tug-of-war between tariff-induced inflation and unemployment. Currently, traders are betting there is only a 33% chance of a 25 bps rate cut later this month. While the BoC might take a pass this month, the coming slowdown in the Canadian economy will warrant rate cuts in June, if not sooner.

Canadian existing home sales plunged last month as tariff concerns moth-balled home buying intentions.

According to data released Monday by the Canadian Real Estate Association, transactions fell 9.8% from January. Activity was at its lowest level since November 2023. Benchmark home prices declined 0.8%, and new listings plunged, more than reversing January’s gains. Housing continues to struggle despite the dramatic easing by the Bank of Canada, which took overnight rates down from 5% in June 2024 to 2.75% today, its lowest level since September 2022.

Were it not for the US announcement on January 20 that it would impose 25% tariffs on Canadian and Mexican goods, housing markets would be headed into a strong Spring season. While we believe that rates will fall substantially further, a strong housing recovery awaits further clarity on the economic outlook. We have revised down our growth estimates for the first and second quarters of this year, raising the prospects for a recession.

The trade war with the US has sharply raised uncertainty. Labour markets are tightening, stocks have sold off sharply, and interest rates are falling. Tariffs will also boost inflation, causing the central bank to ease cautiously.

“The moment tariffs were first announced on January 20, a gap opened between home sales recorded this year and last. This trend continued to widen throughout February, leading to a significant, but hardly surprising, drop in monthly activity,” said Shaun Cathcart, CREA’s Senior Economist. “This is already reflected in renewed price softness, particularly in Ontario’s Greater Golden Horseshoe region.”

Declines were broad-based, with sales falling in about three-quarters of all local markets and in almost all large markets. The trend was most pronounced in the Greater Toronto Area and surrounding Great Golden Horseshoe regions.

New Listings

With sales down amid a surge in new supply, the national sales-to-new listings ratio fell to 49.3% compared to readings in the mid-to-high 50s in the fourth quarter of last year. The long-term average for the national sales-to-new listings ratio is 55%, with readings between 45% and 65% generally consistent with balanced housing market conditions.

At the end of January 2025, close to 136,000 properties were listed for sale on all Canadian MLS® Systems, up 12.7% from a year earlier but still below the long-term average of around 160,000 listings for that time of the year.

“While we continue to anticipate a more active spring for the housing sector, the threat of a trade war with our largest trading partner is a major dark cloud on the horizon,” said James Mabey, CREA Chair. “While uncertainty about the economy and jobs will no doubt keep some prospective buyers on the sidelines, a softer pricing environment alongside lower interest rates will be an opportunity for others.”

At the end of February 2025, 146,250 properties were listed for sale on all Canadian MLS® Systems, up 13.1% from a year earlier but still below the long-term average of around 174,000 listings for that time of the year.

“The uncertainty of the last few weeks seems to be causing some buyers to think twice about big financial decisions right now,” said James Mabey, CREA Chair. “A softer pricing environment and lower interest rates will be a buying opportunity for others.”

There were 4.2 months of inventory nationally at the end of January 2025, up from readings in the high threes in October, November, and December. The long-term average is five months of inventory. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months and a buyer’s market above 6.5 months.

Home Prices

The National Composite MLS® Home Price Index (HPI) declined by 0.8% from January to February 2025, marking the largest month-over-month decrease since December 2023.

The renewed price softening was most notable in Ontario’s Greater Golden Horseshoe region.

The non-seasonally adjusted National Composite MLS® HPI was down 1% compared to February 2024.

Bottom Line

Before the tariff threats emerged, the housing market seemed poised for a strong rebound as the spring selling season approached.

Unfortunately, the situation has only deteriorated, particularly as President Trump has repeatedly suggested that Canada could become the 51st state, further angering Canadians. While the first-round effect of tariffs is higher prices as importers attempt to pass off the higher costs to consumers, second-round effects slow economic activity reflecting layoffs and business and household belt-tightening.

The Bank of Canada will no doubt come to the rescue slashing interest rates further. This is particularly important for Canada where interest-rate sensitivity is far higher than in the US.

The Consumer Price Index (CPI) rose 2.6% year-over-year (y/y) in February, following an increase of 1.9% in January. With the federal tax break ending on February 15, the GST and HST were reapplied to eligible products. This put upward pressure on consumer prices for those items, as taxes paid by consumers are included in the CPI.

While the second straight acceleration in the headline number was expected, the pace of price gains may still surprise Bank of Canada policymakers, who cut interest rates for the seventh straight meeting. Donald Trump’s tariff threats hamper business and consumer spending. But assuming the federal sales tax break hadn’t been in place, Canadian inflation would have jumped even higher to 3% in February. This is at the upper bound of the bank’s target range, from 2.7% a month earlier. Canadian inflation has not been at or above 3% since the end of 2023.

Faster price growth was broad-based in February, the end of the goods and services tax (GST)/harmonized sales tax (HST) break through the month contributed notable upward pressure to prices for eligible products. Slower growth for gasoline prices (+5.1%) moderated the all-items CPI acceleration.

The CPI rose 1.1% m/m in February and 0.7% on a seasonally adjusted basis.  However, the increase exceeded the tax impact as seasonally-adjusted CPI excluding the tax impact was +0.4%. And, in case you want to pin it on food & energy, CPI excluding food, energy & taxes was +0.3%.

Gains were across the board, with the sectors impacted by the tax change seeing the most significant increase: recreation +3.4%, food +1.9%, clothing +1.6%, and alcohol +1.5% more to come next month, with the tax holiday only ending in mid-February. The headline inflation figures are subject to as much noise as we’ve seen in decades. They are poised to continue for at least another couple of months, making it very challenging to interpret the inflation data.

As a result, prices for food purchased from restaurants declined at a slower pace year over year in February (-1.4%) compared with January (-5.1%). Restaurant food prices contributed the most to the acceleration in the all-items CPI in February.

Similarly, on a yearly basis, alcoholic beverages purchased from stores declined 1.4% in February, following a 3.6% decline in January.

On a year-over-year basis, gasoline prices decelerated, with a 5.1% increase in February following an 8.6% gain in January. Prices rose less month over month in February 2025 compared with February 2024, when higher global crude oil prices pushed up gasoline prices, leading to slower year-over-year price growth in February 2025.

Month over month, gasoline prices rose 0.6% in February. This increase was primarily related to higher refining costs amid planned refinery maintenance across North America. This offset lower crude oil prices, mainly due to increased American supply and tariff threats, contributing to slowing global growth concerns.

One notable exception to the broad-based strength was shelter, rising “just” 0.2%. That’s the smallest gain in five months, trimming the yearly pace to 4.2%, the slowest since 2021, with more downside to come. Mortgage interest costs rose a modest 0.2% for a second straight month, slicing it to +9% y/y, ending a 2½-year run of double-digit increases.

Not surprisingly, the core inflation metrics were firm as well. CPI-Trim and Median both rose 0.3% m/m and 2.9% y/y. The 3- and 6-month annualized rates are all above 3% as well, pointing to ongoing stickiness. The breadth of inflation, which has been a focus for the Bank of Canada, also worsened with the share of items rising 3%+ increasing modestly. None of this is encouraging news for policymakers.

Bottom Line

This report will reinforce the Bank of Canada’s cautious stance on easing to mitigate the impact of tariffs. Notably, the upcoming end of the carbon tax will cause inflation to drop sharply in April. However, March may see an increase in inflation as the effects of the tax holiday begin to reverse. There is still a lot of uncertainty surrounding inflation, which complicates the job of policymakers. We will see what April 2 brings regarding additional tariffs.

If the economic outlook did not worsen, the Bank of Canada might consider pausing after cutting rates at seven consecutive meetings. However, the Canadian economy will likely slow significantly in the coming months.

Bank of Canada Governor Tiff Macklem said last week the bank would “”roceed carefully””amid the tariff war. Economists are still awaiting more clarity on tariffs before firming up their expectations for the next rate decision on April 16, when policymakers will also update their forecasts. Right now, traders are betting that the BoC will hold rates steady in April, but a lot can and will happen before then.