Canada Is Already in a Recession, Says CIBC’s Benjamin Tal
Economist calls it the biggest test for the mortgage industry since the 1990s
CIBC deputy chief economist Benjamin Tal says Canada has effectively entered a recession — even if it hasn’t been declared officially.
Speaking at the Mortgage Professionals Canada (MPC) national conference in Ottawa, Tal told brokers and lenders that the current economic conditions mark “the biggest test to your industry since the 1990s.”
“We are in a recession. If it’s not a formal recession, it’s a per capita recession for sure—especially if you live in Ontario and BC,” Tal said.
A “Per Capita Recession” in Real Terms
Tal described the downturn as a per capita recession, meaning that while GDP may not yet be shrinking on paper, Canadians are feeling poorer as population growth outpaces real economic gains.
He pointed to weak consumer spending, rising unemployment, and a “frozen” housing market in major cities as clear indicators of stress.
“The condo market in Canada, especially in Ontario and Vancouver, is in a recession,” he said. “Low-rise is doing okay — not great, just okay. But the high-rise market is struggling, and even purpose-built rentals are only starting to move.”
Tal summarized the market in one sentence:
“Houses are too expensive to buy, and not expensive enough to build.”
Urgent Need for Rate Cuts and Tax Relief
Tal urged policymakers to act fast, calling for both interest rate cuts and the removal of GST and HST on home purchases to jump-start demand and new supply.
“We need to cut interest rates now,” Tal said. “If the Bank of Canada doesn’t move at their October meeting, they’ll have to soon after. They have no choice.”
Major banks, including RBC and Scotiabank, have echoed that forecast, anticipating further rate cuts within months.
Tal also warned of looming payment shocks for homeowners set to renew their mortgages in 2026, estimating that roughly 10% could see payments jump by 50% or more if rates remain elevated.
Immigration Data Distorting the Housing Picture
On demographics, Tal said official immigration numbers underestimate how many people are actually in the country — a gap that has skewed housing forecasts and supply planning.
“We say the population is 41 million. It’s really 42 million,” he said, citing nearly one million non-permanent residents not properly counted in official data.
Statistics Canada reported a Q2 2025 population estimate of 41.6 million, the slowest second-quarter growth since 1946 (excluding the pandemic), mainly due to tighter immigration caps introduced last year.
Outlook: Weak Through 2026, Modest Recovery by 2027
Tal expects the national housing market to remain soft for the next two years, with gradual recovery possible by late 2026 — assuming meaningful tax and policy reforms are implemented.
“Your business will be okay in the second half of 2026 and 2027,” Tal said. “Not great, but okay.”
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This aligns with what many brokers across Ontario are already seeing — fewer qualified buyers, longer approval timelines, and limited new construction starts.
If Tal’s projections hold, the next 12–18 months could bring renewal stress, reduced volume, and heightened demand for alternative and B-lender financing as homeowners adjust to tighter affordability.
Now is the time for brokers to stay close to clients, prepare renewal strategies early, and structure deals that can withstand continued rate volatility.
Sources:
- Mortgage Professionals Canada National Conference, October 2025
- CIBC Economics: Benjamin Tal Remarks, Oct. 2025
- Statistics Canada, Q2 2025 Population Data
- RBC & Scotiabank Economic Outlooks, October 2025
Canada Is Already in a Recession