The tariff tennis match between the U.S. and Canada since Donald Trump took office as U.S. President (combined with an increasingly unstable geopolitical landscape), has left Canadians wondering how to make sense of it all – and what to do about interest rates, mortgages, investments, savings, pensions.
We’re well beyond the traditional advice of “keep calm and carry on” – so what exactly can regular people do to try to mitigate – or prepare for – some of the ongoing turbulence?
Interest rates and mortgages
Despite the uncertainty faced by many around their finances, first-time homebuyers aren’t being deterred from buying a home, but homeowners are waiting until the last possible minute to renew their mortgages, hoping for a lower interest rate, says Richelle Morgan, a mortgage agent at Kingston Mortgage Solutions.
“I would say that the tariffs and the uncertainty isn’t their main focus (for first-time homebuyers),” she says. “For them, it seems to be more on overall affordability because they want to buy a house.”
A 2024 Canadian Mortgage and Housing Corporation study found that nearly 80 per cent of Canadians thought that homeownership is a good investment and a good idea, Morgan says, adding her clients want to make sure that their mortgage payment is an affordable part of their budget. Many of her clients are young families with costs like daycare and increased prices for insurance and groceries.
But homeowners approaching mortgage renewals are closely watching interest rate fluctuations, tariff impacts, and Bank of Canada decisions. The uncertainty has led some to lock in early to secure current rates, while others are waiting until the last month hoping for further rate drops.
“You lock in at your 90 day mark, and if rates do go down, we can still get you that lower one, and it also protects you from it going up,” she says.
Justin Herlick, CEO of Pine Mortgages, confirmed that people are holding out until the last possible moment to renew.
“Over 50 per cent of our clients who come into us will close within one month and that’s not normal,” he says, pointing out that the average cycle is closer to 45 to 60 days, when you can get a rate guaranteed from most lenders for 120 days. He says that because rates have been on this downward trajectory, people are really waiting it out if they believe the fixed rates are going down.
For any first-time homebuyer, Morgan says education and savings are the best defence before buying. That means having a downpayment of more than 20 per cent helps as you won’t have to pay the mortgage default insurance. A credit score of 700 and above helps you get a good interest rate. When it comes to amortization, she says choosing the 25- or 30 year option comes down to your future plans and priorities. That could be lower payments, paying off your mortgage faster, reducing overall interest, or minimizing mortgage default insurance costs. Extending amortization lowers monthly payments but increases long-term interest, so the best choice depends on balancing your short-term budget needs with long-term financial goals.
Investments
As a regular investor, if you have a diversified portfolio, you should turn off the news, “stop touching it and leave it alone.”
That’s the advice from Jason Pereira, Portfolio Manager at IPC securities Corp. He says if investors have put in place a proper asset allocation that’s diversified, supports their long term financial plan and is within their risk tolerances, they shouldn’t do anything.
“Regardless of what causes it at any point in history, what we have seen this year, in terms of the actual market lines moving up and down, is normal, despite the fact people don’t want to believe that,” says Pereira.
If you’re legitimately looking at your portfolio and can’t stomach the volatility, Pereira adds, you might have a problem with how your portfolio is allocated. He recommends speaking with a professional and getting a financial plan, so that you can diversify your portfolio to match with that plan and your risk tolerance.
You can test your plan by looking at whether you survive a 20 per cent hit to your portfolio.
“(You have to know) what is the max amount of loss you can actually take in a year before you jeopardize what you want out of life?,” he says.
And while there are a lot of articles out there about buying the dip or getting assets cheaper as the market dips, Pereira points out that the entry point of buying the dip with small incremental money over the life course of your lifetime has very little impact on the actual outcome.
“It’s time in the market,” he says.
Behaviour and community
Tariffs, geopolitics and elections are giving everyone anxiety and creating uncertainty. Behavioral economists Michelle Hilscher, Senior Manager of Behavioural Economics, and Kelly Peters, Behavioral Economist Leader and Partner, both at Deloitte, have noticed an increase in the scarcity mindset. Hilscher says this is leading people to focus on short-term survival rather than long-term planning.
“I think uncertainty raises the question for people of ‘Will I have enough? What’s coming? Am I going to be okay?’,” says Hilscher. This makes people focus on immediate comforts and impulse spending – and not on the long-term solution – because they don’t know what’s happening in the future.
While impulse spending is a common reaction to stress and uncertainty, Peters suggests using that urge to impulse spend to encourage what she calls ‘impulse saving,’ which is transferring small amounts into a savings account whenever an impulse purchase is made.
“It’s very easy for us to justify impulse spending but what we haven’t allowed ourselves is a similar habit around impulse savings, and it’s the same construct,” she says.
“It is a few dollars here and there that you transfer from place A to place B into a savings account. So every time you splurge on X, make sure that you also put a small amount into your savings account.” Peters says this small action can help save money and gives people a sense of control over their finances.
Cultural changes around money also need to change, they say. “We need to move on from what have been perceived as individual problems to collective solutions,” Peters says.
The biggest challenge, she says, is maintaining hope.
It’s not just a mindset; it’s a practice. Taking care of yourself, staying engaged, and building financial habits are acts of defiance in an unpredictable world.
