On The Radar: Immigration Brake, Near Zero Population Growth, and What It Means for Canadian Mortgage Rates

Quick Takes

Statistics Canada’s latest estimates confirm that the immigration brake is biting. From April 1 to July 1, the population grew by 47,098 people, or 0.1 percent. International migration still did most of the lifting, but at a much smaller scale than in 2023 and early 2024. International migration contributed 33,694 people, natural increase added 13,404. The non‑permanent resident population fell for a third straight quarter, down 58,719 in the second quarter, with declines led by study and work permit holders and a partial offset from asylum claimants. On July 1, non‑permanent residents made up 7.3 percent of the population, down from a 7.6 percent peak last fall. Over the year to July 1, 2025, population growth slowed to about 0.9 percent, a fraction of the pace seen during the 2023 to 2024 surge.

The regional pattern matters for housing. British Columbia saw a small net population decline as non‑permanent resident outflows more than offset gains from immigration, natural increase, and interprovincial inflows. Alberta and Prince Edward Island led gains. Slower net inflows in Ontario and Quebec line up with softer rental demand at the margin and with early signs that vacancy is drifting higher in several large markets.

Policy choices explain most of the turn. In late 2024 the federal government introduced temporary‑resident targets alongside permanent‑resident levels for the first time, and set a goal to bring temporary residents down to 5 percent of the population by the end of 2026. That guidance effectively sets a ceiling on near term population growth unless permanent admissions are raised to compensate. The fall Levels Plan update will reveal whether Ottawa intends to hold to that path or adjust it to address skilled‑trade shortages as the housing build out proceeds.

Why this matters for housing and mortgage pricing

With fewer new students and temporary workers arriving, pressure on rentals is easing at the margin. By mid 2025, several bank and industry trackers were already flagging year over year rent declines across more than half of Canada’s census metropolitan areas, and vacancy rates that were no longer falling. That combination typically takes some heat out of shelter inflation with a lag, which supports front end policy easing as long as core measures stay contained.

Lower policy rates are already filtering through to variable borrowing costs after the September 17 cut to 2.50 percent, which reduces pressure on prime linked mortgages and home equity lines of credit. Additional lower rents are a significant component in easing inflation, which allows the Bank of Canada to potentially continue with future rate cuts. 

What changed in the United States and globally

The Federal Reserve delivered a quarter point cut on September 17 and set the target range at 4.00 to 4.25 percent, while signaling patience on the pace of additional moves. Even with the policy pivot, United States ten year yields remain in the low fours, and commonly watched measures of term premium have turned positive again. Those forces keep global long rates sticky and help explain why Canadian five to ten year yields have eased only slowly even as the domestic front end moves down.

What to watch next

Bottom Line

Canada’s immigration brake is cooling near term rental demand and lifting the odds that shelter inflation keeps trending lower. That combination supports gradual easing at the front end, which helps variable borrowers first. Fixed rates will follow the five year Government of Canada and the term premium story from the United States, so improvements there should be steady rather than sudden.