Canada’s decision to tighten restrictions on imported foreign steel might seem distant from everyday homeownership — but the ripple effects could land squarely on your mortgage and the cost of your next renovation or new build. This newly imposed policy, set to take effect in late December, is sparking concerns among builders, developers, and homebuyers that housing costs could rise — again.
Why does this matter? Simple: steel is one of the most widely used materials in modern construction. From the framing of multi-family buildings to the rebar beneath your concrete driveway, it’s embedded in nearly every square foot we own — meaning rising steel costs could have a very real effect on what you pay for a home.
How Tariffs Trickled Into the Housing Cycle
The federal government will tighten its existing safeguard measures on certain steel imports starting December 26. It’s a policy ostensibly aimed at protecting domestic producers from international dumping, but it may also drive up construction costs across the board. According to the Canadian Construction Association, nearly one-third of all reinforcing steel used in Canada comes from outside the country.
For developers, that means higher upfront material costs, which are typically passed down the chain — ultimately to the buyer. In a market that’s already strained by record-low housing supply and high demand, any factor that increases costs will likely show up in sale prices.
That’s especially worrying when combined with stubbornly high interest rates. According to the Canada Mortgage and Housing Corporation (CMHC), new housing construction declined in 2023 due to rising inflation and interest costs, particularly in Ontario and British Columbia. New tariffs could discourage builders even further, putting more pressure on limited supply.
And for those renovating or constructing custom homes using a construction mortgage, these increased costs could turn carefully planned budgets into financial stress points, especially with borrowing rates already elevated.
Canada’s Housing Affordability: A Tightrope Walk
The affordability crisis in Canadian housing isn’t a new headline — but it is an evolving one. From Vancouver to Toronto, prospective buyers are already struggling to meet mortgage qualification standards and save for down payments amid high rents and inflation.
And with the average cost per square foot for a new build already hovering around $225–$300 in suburban Ontario (CMHC), even a small percentage increase in material prices can have a big impact. For example, a typical 2,000 sq. ft. home could cost $10,000–$20,000 more to build if steel prices rise just 5%.
What does that mean for your mortgage? Higher home costs lead directly to larger loan amounts or smaller properties for the same budget. This becomes especially notable when buyers are eyeing fixed-rate mortgages to guard against future rate hikes. If prices keep moving upwards, locking in a stable interest rate may become a priority sooner than later.
From a broader perspective, real estate is a key driver of Canada’s economy. If new construction slows, it could impact jobs, municipal revenues, and even the Bank of Canada’s policy approach. A slow housing market can pressure the Bank to lower rates faster than planned, although inflation data remains their primary guide.
Western Canada Feeling the Heat
While the tariff policy is national, Alberta and Saskatchewan are raising concerns. Western Canadian builders often rely more heavily on U.S. and offshore steel, due to logistics and proximity. With local manufacturers concentrated in Central Canada, higher freight costs and logistical delays are already challenging for Prairie-based developers.
Any added expense lands on both investors and individual homebuyers looking to build or renovate properties across Western markets. That’s already started to trickle into home pricing forecasts for 2024. According to the Canadian Real Estate Association (CREA), the national average home price is expected to see a modest increase in 2024, driven largely by strong demand and persistent supply tightness.
But unexpectedly higher material costs could amplify that projection — unless developers find ways to absorb the hike or pivot to alternative materials, both of which are challenges in an industry facing skilled labour shortages and softening buyer confidence.
For those homeowners looking to tap into home equity during this period of flux, options like a refinance or HELOC might offer some breathing room — provided you lock in your terms before further interest rate uncertainty returns.
What Homeowners Should Watch For
While this policy doesn’t directly increase your mortgage rate, it does place upward pressure on build prices, renovations, and potentially resale values — all of which shape the housing economy. For example, homeowners planning to sell in 2024 could benefit from an uptick in replacement value driving property appraisals higher. But buyers, especially those stretching to qualify, may find fewer affordable listings in an already tight market.
If you’re someone planning a major home renovation, new build, or transition to a second property, it’s worth reviewing your financing strategy with a mortgage broker. Timing your application — and predicting price momentum — will be essential over the next year.
And if you’re nearing retirement or have significant home equity, reviewing reverse mortgage options could offer flexibility in a market that keeps shifting under our feet. Housing is still a long-term investment, after all, and making it work through policy changes requires a watchful eye on every side of the ledger.
Final Thoughts
It’s easy to see tariffs as far-away economic levers, but they hit close to home — literally. From the cost of your next build to the trajectory of your mortgage, Canada’s new steel policy could shape your financial path in 2024 and beyond.
If you’re unsure how changing material and construction costs may affect your borrowing strategy, we’re here to help. At Unrate, we connect you to the right lending solutions for your unique needs — whether you’re planning, building, or buying.
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