The Holiday season is here, and Canadians are showing surprising resilience in their spending—despite high interest rates and cost-of-living pressures. While you might expect tighter wallets in today’s economic climate, new data suggests consumers are still opening them wide, particularly in support of local retailers. But what does that mean for the housing market and homeowners juggling mortgages in this environment?
Recent figures from the Retail Council of Canada reveal that Canadians are planning to spend an average of $943 this holiday season. That may not seem like mortgage news at first glance, but this level of consumer confidence is a key indicator in Canada’s economic puzzle. For homeowners and potential buyers, consumer behaviour gives us important clues about real estate trends, interest rate expectations, and the broader housing economy.
Consumer Confidence Amid High Rates: A Telling Signal
There’s no denying that 2023 has been a challenging year for borrowers. The Bank of Canada has increased its policy interest rate 10 times since March 2022—bringing it to 5.0% as of this writing. We’ve seen borrowing costs skyrocket and home affordability take a hit across the country. And yet, Canadians are still spending.
When people continue making non-essential purchases during tough financial times, it suggests a belief that better days are ahead or, at least, that their household finances are stable enough to weather the storm. This optimistic consumer behaviour carries over into the housing market in subtle, yet meaningful ways.
For example, housing demand hasn’t disappeared—it’s just evolving. Buyers who might have paused their house hunt earlier in the year due to interest rates are now returning to the market with adjusted expectations. While they may be buying smaller homes or moving further outside urban cores, many still see homeownership as a long-term investment worth pursuing.
Real Estate Trends: Stabilization Over Collapse
According to the Canadian Real Estate Association (CREA), national home sales in October ticked slightly upward compared to earlier months, reinforcing the idea that the market is slowly finding its footing. This stands in contrast to predictions of a free-fall.
Yes, prices are down from their early 2022 peaks, but many regions—especially Ottawa, Calgary, and parts of Atlantic Canada—are demonstrating a remarkable amount of price stability. This aligns with the notion that Canadians, while cautious, haven’t lost faith in the real estate market.
And that faith is partly driven by things like recent holiday spending. It demonstrates that Canadians are still investing in their quality of life. That, in turn, reinforces confidence among both buyers and sellers that our housing market is enduring—not collapsing.
Homeowners Holding Ground
For existing homeowners, this slow-creeping optimism can be reassuring. After all, many are facing mortgage renewals in an environment that doesn’t look anything like it did five years ago. Fixed rates, while still elevated, have started to cool in recent weeks. According to Unrate.ca’s current fixed rate offers, some 5-year terms have dropped under 5.5% from previous highs above 6%.
If you’re a homeowner with a renewal coming up, or someone managing a variable-rate mortgage, small shifts like these matter. They could mean the difference between extending your amortization or keeping your budget intact.
And here’s where holiday spending comes back into play: when households hold their spending power, it helps keep the overall economy churning. That activity supports local businesses, drives job security, and can ultimately soften the blow of high borrowing costs.
Looking Ahead: Why It’s Time to Plan Strategically
The next few months will likely bring more clarity to Canada’s economic direction. The Bank of Canada has paused on further hikes for now, and most economists expect rate cuts sometime in mid-to-late 2024 if inflation continues trending downward.
For homeowners, this is an ideal time to revisit your mortgage strategy. Avoiding a panicked decision today could mean saving thousands later. Whether you’re considering a refinance to lock in a lower rate or thinking about tapping into your home equity with a HELOC, aligning your mortgage with your life today can help you thrive through this transition period.
Even if your financial situation feels stretched, like it does for many Canadians during the holidays, the good news is that lenders are offering more flexible repayment options than ever. You don’t always have to make drastic sacrifices to stay on target.
Conclusion: Confidence Is Fueling Stability
The continued willingness of Canadians to support their communities—even in a season known for spending—sends a strong signal that confidence still underpins our economy. That sentiment is rippling into the housing market and softening what could have been a rougher landing.
As a homeowner, this is the perfect time to assess your mortgage and determine whether it fits your needs going forward. If you’re unsure where to start, Unrate can help you explore the best mortgage rates for your situation and build a tailored strategy that anticipates what’s next.
The landscape may still feel uncertain, but with the right plan, stability—and even opportunity—are closer than you think.
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