A new warning from the Bank of Canada is putting the economy back in the spotlight. Governor Tiff Macklem said on September 21 that new U.S. tariffs could push Canadian economic growth below 1% in the fourth quarter, compared with an earlier projection of 1.5%. At the same time, inflation remains around 3%, creating a difficult balance for interest-rate policy.
For GTA buyers, this creates an unusual situation. Slower economic growth normally increases pressure for lower interest rates, which can help mortgage affordability. But higher inflation can push in the opposite direction and make the Bank more cautious about cutting rates.
That means buyers waiting for a big drop in borrowing costs may need to be patient. The Bank of Canada’s policy rate is still 2.25%, and posted mortgage rates at major banks have remained relatively stable in recent weeks.
For sellers, economic uncertainty can make buyers more cautious, especially those worried about employment or monthly mortgage payments. But it can also keep some homeowners from listing, which may limit available inventory. That is why slower economic growth does not automatically translate into sharply lower home prices.
The simple takeaway is this: the GTA market may remain caught between softer economic growth and stubborn borrowing costs. Buyers should focus on whether they can comfortably afford the home today, while sellers should price based on current neighbourhood demand rather than waiting for interest rates to make the decision for them.
Source: Bank of Canada / Reuters, September 21, 2026.