According to Statistics Canada, real GDP fell 1.6% year-over-year in Q2, far worse than the -0.6% decline economists expected. The culprit? A stunning collapse in exports to the U.S.
🚨 Key Takeaways:
- Exports to the U.S. fell 7.5%, the steepest drop in five years.
- Passenger car and light truck exports plunged nearly 25%.
- Business investment in machinery and equipment slid 0.6%, the first decline since the pandemic.
- Domestic demand held steady with 3.5% growth, softening the blow.
The U.S. remains Canada’s largest trading partner, so when Washington ramps up tariffs — most recently hiking steel, aluminum, and other goods to 35% under the Trump administration — Canada feels the squeeze. Ottawa briefly retaliated, but ultimately rolled back some tariffs to avoid further escalation.
What Does This Mean for Canadians?
The contraction has markets buzzing about whether the Bank of Canada (BoC) will finally cut rates. For three straight meetings, the BoC has held the policy rate at 2.75%, but the next meeting on September 17 could bring a change if weakness persists.
For homeowners and borrowers, this could translate into lower borrowing costs ahead. For investors, the volatility underscores the importance of asset-backed strategies that don’t rely on trade flows or fragile GDP growth.
Lendworth’s Take
At Lendworth, we see periods of economic contraction as a reminder of why real estate–backed investing remains one of the most resilient strategies in Canada. While exports stumble and manufacturing slows, demand for housing and mortgage solutions in the GTA continues. Our focus on low loan-to-value ratios and asset-backed lending helps protect capital and deliver strong returns, even when the broader economy stumbles.
👉 Whether you’re a homeowner wondering if rates are about to drop, or an investor looking to protect your portfolio, times like these prove why diversification into mortgage investments matters.