With Donald Trump’s election win this month, there’s been plenty of speculation about how his policies could affect the U.S. economy. But what does this mean for Canadians—especially homeowners with mortgages?

While a U.S. presidency might seem removed from your financial decisions, the interconnected nature of our economies means U.S. policies can significantly influence Canadian mortgage rates, housing costs, and overall consumer spending. Let’s explore the key U.S. policy promises and their potential implications for Canadian borrowers:

One of Trump’s hallmark policies involves major tax cuts designed to spur U.S. economic growth. While this boosts business investments and consumer spending in the U.S., there’s a ripple effect in Canada. As U.S. businesses expand, Canadian exporters often benefit from increased demand. However, this growth can drive inflation if supply struggles to keep pace with demand. Inflationary pressures could eventually lead to higher interest rates, increasing mortgage costs for Canadians.

Trump’s “America First” agenda, particularly trade tariffs, has already created global economic ripples. While Canada largely avoided direct tariffs during Trump’s previous term, global trade disruptions have driven up costs for imported goods, fueling inflation. Recently, Trump has floated the idea of a 25% tariff on all goods from Canada and Mexico, which could exacerbate inflationary pressures here at home. Should inflation rise further, the Bank of Canada might raise interest rates, impacting borrowing costs for Canadians.

Trump’s restrictive immigration policies have created labour shortages in the U.S., with potential implications for Canada. As fewer workers fill roles south of the border, U.S. companies may look to Canada’s labour market, driving immigration and supporting Canadian businesses. On the flip side, deportation promises could intensify labour shortages, increasing wages and contributing to inflation in Canada. For homeowners, rising costs in housing and services could further strain budgets.

The Federal Reserve’s monetary policy decisions are closely tied to the Bank of Canada’s. If the Fed continues easing rates, the BoC may follow suit to remain competitive. However, persistent global inflation could limit rate cuts in both countries, meaning Canadian mortgage rates may not drop as much as expected. This is especially significant for homeowners facing mortgage renewals in the near future.

The evolving global and U.S. economic landscape underscores the importance of staying informed about potential rate changes. If the Bank of Canada adjusts rates in response to U.S. policy shifts, it could impact mortgage rates, monthly payments, and affordability for Canadians.

For homeowners preparing for a renewal or considering their next steps, it’s more important than ever to have expert guidance. At First Avenue Financial, we’re here to help you navigate the complexities of the current rate environment and make informed decisions about your mortgage.

If you have questions or concerns about your mortgage or want to explore your options, reach out today. We’re here to ensure your financial future stays on track.