Trade Wars: Economic Impact & What You Can Do
The Bank of Canada is set to announce its second-interest rate decision of the year on March 12, and speculation is growing about the size of the rate cut to help the economy absorb the shock from the U.S. President’s new tariffs. Markets are anticipating a 50-basis point cut, marking the seventh consecutive rate reduction. If this happens, variable mortgage rates could drop below 4% for the first time in years.
Fixed mortgage rates are also trending downward, and we expect the 5-year fixed rate to fall below 4% soon. These lower rates are improving home affordability, offering relief to borrowers and the real estate market. But the big question remains: Will it last?
Trade wars have far-reaching economic and political consequences, with few real winners. Some of the key impacts include:
Higher prices for consumers
Economic slowdown
Job losses
Retaliatory tariffs from other countries
Strained international relations
Volatility in financial markets
While certain domestic industries may see short-term gains, the long-term effects of trade wars are generally negative for everyone.
How To Protect Yourself
Here are some financial strategies to navigate uncertain times:
Minimize debt: Prioritize paying off high-interest debt and build liquidity. Consider refinancing your mortgage if needed.
Cut unnecessary expenses: Reduce discretionary spending to improve financial flexibility.
Postpone major purchases: Avoid large financial commitments until the economic outlook stabilizes.
Support Canadian businesses: Buying local products helps sustain the economy.
Rebalance your investments: Adjust your portfolio and increase cash reserves to take advantage of buying opportunities.
Alternative Lending & Mortgage Options
With interest rates declining across the board, alternative lending rates are also dropping. Second mortgages are now available with rates as low as 7.99%, offering quick and accessible financing options.
“Now more than ever, financial preparedness is key. Taking proactive steps can help you stay ahead in an uncertain economic landscape.”
Did you know? Last year saw the slowest new condo sales in the Greater Toronto and Hamilton Area since 1996.