It remains unclear how severe the crackdown will be – but Canada’s economy is gearing up for a fresh round of US tariffs today, with Canadian steel and aluminum expected to feature prominently among exports facing so-called “retaliatory” charges from US president Donald Trump.
Windsor, ON, an automaking hotbed that straddles the US border and is just a stone’s throw from Detroit, could be one of the Canadian cities hit the hardest by Trump’s tariffs, especially if levies against car parts from Canada come into effect.
Unsurprisingly, that chaos – which some economists have warned could put thousands of Canadian jobs at risk – is featuring prominently in conversations between mortgage brokers and their clients as homeowners and hopeful buyers weigh up how a bruising trade war could impact their own circumstances.
But Windsorites are looking on the bright side as Trump’s tariffs loom, according to Mortgage Intelligence broker Rasha Ingratta (pictured), who told Canadian Mortgage Professional the prospect of lower interest rates in the event of an economic downturn could spur some mortgage market activity.
“The conversations we’re having on a daily basis with customers are, ‘How will this impact our mortgage interest rates?’ she said. “A lot of people are coming up for renewal. This year and next year are going to be our biggest years of mortgages coming up for renewal.
“I call this an economic earthquake. The average individual doesn’t really know until they start to do their research: interest rates do come down when these things happen. So it’s good news for people that are coming up for renewal.”
Could a trade war lower mortgage rates – and spur homebuying activity?
Meanwhile, those who are in a position to buy – and feel confident that their job won’t be put at risk by the tariffs – are starting to “come out of the woodwork” in anticipation of lower interest rates down the line, according to Ingratta.
The Bank of Canada is currently expected to trim its own benchmark interest rate as low as 2% this year, according to the Bank of Montreal (BMO) – and potentially lower if tariffs stay in place for longer than expected – while bond yields could tumble in the event of a sharp economic contraction as a result of Trump’s actions.
“We’re starting to see interest rates that begin with the number three and I think that by the end of this year, we’re going to start seeing interest rates in the low threes,” Ingratta said, “just because of what’s happening with the market and because of tariffs.”
But there’s no question that Windsor residents are holding their breath as they brace for the impact of a trade war and the prospect of layoffs and job losses in the automotive sector.
The pain is being felt on both sides of the border, according to Ingratta, with Detroit and Windsor residents mingling in both cities and relationships often extending across the divide.
But she’s looking on the bright side despite the potential coming chaos. “I always have a positive outlook, even when things are negative,” she said. “I really think this year is going to be a good year because interest rates are coming down. If you look at the average price of a home in Windsor, let’s say it sells for $600,000. That same house was selling for $700,000 or $750,000 a few years ago.
“A few years ago, let’s say rates were 2%. Today, they’re 3.89%. So yes, they’re higher, but your downpayment is going to be lesser. Your insurance premium is going to be less than your mortgage payments. And the government is coming up with different strategies – extending amortizations, an insured mortgage [hike]. They’re making it easier for the consumer.”
Opportunities remain despite the prospect of a trade tussle
It remains to be seen what’s coming down the line for the Canadian economy in the face of Trump’s tariff threats – or even whether they’ll come to pass, with the US president having deferred levies against Canada in both February and March.
Ingratta, though, sounded a positive note on what’s ahead. “What I tell a lot of my customers is that there’s always uncertainty in the market,” she said. “I’ve been doing this since 1999 – for 26 years. There have been a few times like 2008 where there was uncertainty in the market and people were scared.
“Just don’t worry. Give it a little bit of time. Make sure you do your homework. Make sure you strategically plan and you’ll come out doing well. Talk to the right professionals… Don’t let things like tariffs and economic uncertainty deter you.”
CMP
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