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Mortgage Digest: CREA updates 2025 forecast with higher sales and price growth

A regular review of the latest mortgage and real estate news, a recap of key headlines, and a preview of upcoming economic releases.

Mortgage Digest Report

The Canadian Real Estate Association (CREA) has raised its 2025 home sale and price growth forecasts slightly compared to its fall projections.

“The assumption remains that the combination of two and a half years of pent-up demand and lower borrowing costs, together with the usual burst of spring listings will lead to a rebound in market activity across the country in 2025,” the association said in a release.

It added that the December and fourth-quarter sales figures provide an early indication of what could unfold in the spring market.

Sales forecast: CREA now expects 532,704 homes to sell via MLS in 2025, an 8.6% increase from 2024. This is up from its previous estimate of 6.6% growth, reflecting stronger-than-anticipated activity at the end of 2024. For 2026, sales are projected to rise another 4.5% to 556,662 units.

Average price forecast: The national average home price is forecasted to reach $722,221 in 2025, a 4.7% increase year-over-year, and up slightly from its previous +4.4% forecast. CREA expects an additional 3.3% increase in 2026, bringing the average to $746,379.

While regions like Alberta and Saskatchewan could see sharp price increases due to tight supply, British Columbia and Ontario may experience more moderate growth because of higher inventory.



CRA to administer capital gains tax changes despite parliamentary prorogation

The Department of Finance has confirmed that the Canada Revenue Agency (CRA) will move forward with administering proposed changes to the capital gains inclusion rate, effective June 25, 2024.

Under the proposed changes unveiled in Budget 2024, the taxable portion of capital gains will increase from 50% to 66.67% for corporations and trusts, as well as for individuals with annual capital gains exceeding $250,000.

The CRA plans to release updated forms by January 31 and will provide relief from arrears interest and penalties for corporations and trusts with filing deadlines on or before March 3, 2025.

If Parliament does not pass the legislation when it resumes, or if the government decides not to proceed with the changes, the CRA will cease administering the new rules, according to a statement from the agency.

In October, economist Jack Mintz cautioned that raising the capital gains inclusion rate could result in the loss of over 414,000 jobs and a significant $90-billion blow to Canada’s economy.


Consumer spending rebounded in December after slow start

Holiday spending gained momentum in December after a sluggish November, as shoppers waited to take advantage of a federal tax holiday on children’s items.

Retail sales, excluding autos, dipped in November following stronger activity earlier in the fall, according to RBC’s latest Consumer Spending Tracker. Spending on categories like hobbies, toys, and games dropped sharply late in November, coinciding with the announcement of the GST/HST exemption.

The tax holiday, which began mid-December, likely encouraged consumers to hold off on purchases until they could take advantage of the savings, says report author Carrie Freestone.

“The higher spending in December comes as population growth shows signs of slowing, leaving per-capita spending tracking a second consecutive increase in Q4,” Freestone noted.

While the threat of tariffs under the incoming Trump administration in the U.S. remains a risk, “we continue to expect lower interest rates will help support stronger real per-capita consumer spending in the year ahead,” Freestone added.

Consumer spending 2023 vs. 2024

2024 Annual Information Return (AIR) filing now open in Ontario

Licensed mortgage brokerages and administrators in Ontario can now begin filing their 2024 Annual Information Return (AIR), a mandatory compliance requirement enforced by the Financial Services Regulatory Authority of Ontario (FSRA). This year, FSRA has launched the AIR earlier to give businesses additional time to complete their submissions.

Key details:

  • Who must file: All licensed brokerages and administrators, including those that did not conduct any business in 2024.
  • Purpose: The AIR collects information on business practices, internal controls, and market conditions to support FSRA’s risk assessment and regulatory oversight.
  • Submission deadline: March 31, 2025.
  • Submission method: The AIR must be filed via FSRA’s Licensing Link. Paper submissions are not accepted, and changes cannot be made once the form is submitted.
  • Consequences of non-compliance: Failing to file on time can result in penalties, including administrative monetary fines or licence suspension/revocation.

Brokerages are also required to include details about their errors and omissions insurance coverage, and provide a designated email address for consumer complaints, which may appear in the FSRA public register.

For more information and to access the AIR form, visit FSRA’s website at fsrao.ca.

For other provinces, filing requirements and deadlines may differ. It’s essential to consult the specific regulatory authority in your province or territory to understand their AIR filing obligations and timelines.


Mortgage snippets

Mortgage snippets
  • Bond yields are retreating from latest highs: Canada’s 5-year bond yield has eased to 3.06% as of Thursday afternoon, down from its peak of 3.24% last week. The decline began after U.S. inflation data released on Monday showed core inflation easing, reducing some market concerns.

    Bond yields, which are closely tied to fixed mortgage rates, could signal some stabilization in rates, which have been trending higher over the past week in response to elevated yields.
5-year bond yield
Source: tradingeconomics.com
  • Mortgage arrears tick up in October: Canada’s national mortgage arrears rose to 0.21% in October, with 10,286 mortgages now three or more months overdue, according to the Canadian Bankers Association (CBA). This is the highest arrears level since April 2021, rising from the pandemic low of 0.14% recorded in 2022.

    Saskatchewan leads with the highest arrears rate at 0.58%, while Ontario, Quebec, and British Columbia share the lowest rate at 0.17%.

Next Steps: Mortgage industry career moves

Next Steps: Mortgage industry career moves

“Next Steps” is a feature in our Mortgage Digests that highlights notable job changes and career advancements within the mortgage industry. If you have a job update to share, we welcome your submissions to keep the community in the loop.

Russ Mendonca named VP of credit operations at Bridgewater Bank

Russ Mendonca, Vice President of Credit Operations, Bridgewater Bank
Russ Mendonca, Vice President of Credit Operations, Bridgewater Bank

Bridgewater Bank has announced Russ Mendonca as its new Vice President of Credit Operations. In this role, Mendonca will focus on balancing credit risk within the bank’s lending portfolio while driving business growth through efficient operations.

Mendonca brings extensive experience in financial services, with a strong background in alternative lending.

In a release, the company said Mendonca’s leadership “will enhance the bank’s commitment to delivering flexible, innovative solutions tailored to meet the unique needs of our broker partners.”

“I’m thrilled to join Bridgewater Bank and work alongside a team that is committed to innovation and creating value for our partners,” Mendonca said. “Together, we’ll deliver the level of service and flexible solutions our brokers can depend on.”

CREA announces interim CEO of REALTOR.ca

CREA has announced Patrick Pichette as interim CEO of its newly formed subsidiary, REALTOR.ca Canada Inc.

Patrick Pichette
Patrick Pichette

Pichette, who has served as VP of REALTOR.ca for over six years, will lead the platform’s strategic direction during this transition.

Pichette played a key role in building REALTOR.ca into one of Canada’s leading real estate platforms. He also brings experience from senior roles at MD Financial Management and the Canadian Tourism Commission.

“I’m honoured to continue to lead the exceptional REALTOR.ca team and look forward to building on the incredible momentum of the past several years,” said Pichette.


EconoScope

EconoScope:
Upcoming key economic releases to watch

CountryDateTime (ET)ReleasePrevious readingConsensus forecast
Fri.
Jan. 17
8:30 a.m.Housing starts (Dec)1.289M1.315M
Fri.
Jan. 17
8:30 a.m.Building permits (Dec)
1.493M1.458M
Mon.
Jan. 20
10:30 a.m.BoC Business Outlook Survey & Survey of Consumer Expectations (Q4)
Mon.
Jan. 21
8:30 a.m.Consumer Price Index (Dec)+1.9%
Thurs.
Jan. 23
8:30 a.m.Retail Sales (Nov.)+0.6%
$67.6B
Fri
Jan. 24
8:30 a.m.New Housing Price Index (Dec)+0.1%
Fri
Jan. 24
8:30 a.m.Existing Home Sales (Dec)+4.8%

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Last modified: January 17, 2025

Steve Huebl is a graduate of Ryerson University's School of Journalism and has been with Canadian Mortgage Trends and reporting on the mortgage industry since 2009. His past work experience includes The Toronto Star, The Calgary Herald, the Sarnia Observer and Canadian Economic Press. Born and raised in Toronto, he now calls Montreal home.

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