Ontario’s recent announcement to expand the HST rebate on new homes is a meaningful policy shift aimed at improving affordability.

While the headline numbers are significant, the real value comes from understanding how this rebate fits into a broader home-buying and mortgage strategy.

What Is Changing

Ontario is proposing to remove or significantly reduce the provincial portion of the HST (8%) on qualifying new homes.

This is intended to complement the federal government’s updated GST rebate, which applies to the 5% federal portion of sales tax on new housing.

When combined, these measures can substantially reduce the total tax burden on eligible new construction purchases.

How This Impacts Purchase Costs

To understand the practical impact, it helps to look at a simplified example.

Example: New Home Purchase at $900,000

• Total HST (13%) = $117,000
• Federal portion (5%) = $45,000
• Provincial portion (8%) = $72,000

Under the proposed changes, a qualifying buyer could see most or all of this amount rebated, depending on final program details and eligibility.

From a financial planning perspective, this effectively reduces the total cost of the home — which can influence both down payment requirements and mortgage sizing.

Who Should Pay Attention

This change is most relevant for:

1. Buyers considering new construction: The rebate improves the relative affordability of new builds compared to resale homes.
2. Buyers close to qualification limits: Reducing the effective purchase price can improve mortgage qualification outcomes under the stress test.
3. Buyers planning ahead: New construction often involves longer timelines, which can allow for more structured financial planning.

Important Considerations

As with any policy change, there are important details to keep in mind:

• The rebate applies to new homes, not resale properties
• Eligibility criteria (including price thresholds) will matter
• The timing of purchase and closing may affect qualification
• Mortgage approval is still based on current lending rules, including the stress test

In other words, while the rebate improves affordability, it does not replace the need for careful financial planning.

How This May Influence Buyer Decisions

For some buyers, this change may shift the comparison between:

• Resale homes (lower upfront price, no HST)
• New construction (higher base price, but now with reduced tax burden)

In certain scenarios, the after-tax cost of a new home may be more competitive than it has been in recent years.

The Broader Context

This policy reflects a broader effort to:

• Encourage new housing supply
• Support buyers entering the market
• Improve affordability without directly lowering interest rates

These types of measures tend to be most beneficial for buyers who are prepared and understand how to integrate them into their overall plan.

Bottom Line

Ontario’s expanded HST rebate has the potential to meaningfully reduce the cost of new homes for eligible buyers.

However, the real benefit depends on how it aligns with your:

• Purchase timeline
• Financing strategy
• Long-term housing goals

As with most mortgage decisions, the best outcomes come from evaluating the full picture — not just one component in isolation.

If your mortgage is coming up for renewal in 2026, you’re likely transitioning from a rate environment we may not see again for a long time.

Many homeowners secured mortgages at rates between 1.5% and 2.5% just a few years ago. Today, renewal rates are significantly higher — and for most, that means higher monthly payments.

The natural reaction is to focus on one question:

“How do I get the lowest rate possible?”

But in today’s environment, that’s only part of the answer.

A More Useful Question: What Does My Total Debt Cost Look Like?

Your mortgage is usually your largest debt — but it’s rarely your only one.

When payments increase at renewal, the real pressure often comes from the combined effect of all debts, such as:

• Lines of credit
• Credit cards
• Vehicle loans
• Other installment debt

Each of these carries a different interest rate — often much higher than a mortgage.

So instead of focusing only on your mortgage rate, it can be more effective to look at your overall (or “blended”) cost of debt.

A Simple Example

Let’s look at a common scenario (assume 25-year amortization, 5-year term):

Before Renewal:

• Mortgage: $500,000 at 2.0% → ~$2,100/month
• Line of credit: $50,000 at 8% → ~$330/month interest
• Credit cards: $15,000 at 19% → ~$240/month interest

Total monthly debt cost: ~$2,670

After Renewal (No Strategy):

The mortgage has 20 years of amortization left. ~$416,000 balance.

• Mortgage renews at ~4.5% → ~$2,630/month
• Other debts unchanged**

New total monthly cost: ~$3,200

➡️ Increase of nearly $530/month

➡️ That’s an increase of $31,800 over the next 5 years

** Assumes the LOC and Credit cards make only minimum interest payments.

After Refinance Consolidation Strategy:

• Mortgage refinanced to include other debts, 20-year amortization
• New mortgage: ~$481,000 at ~4.5%

New total monthly cost: ~$3,032

➡️ Still higher than before — but ~$168/month lower than just renewing➡️ Plus simplified payments and lower overall interest on high-rate debt

➡️ Saves ~$10,000 vs straight renewal over the next 5 years

Why This Matters Right Now

Two things are happening at once:

1. Mortgage payments are rising at renewal
2. Higher-interest debt hasn’t gone away

Looking at these separately can make the situation feel tighter than it needs to be.

Looking at them together creates opportunities to:

• Improve monthly cash flow
• Reduce interest on high-rate debt
• Simplify your financial structure

Using Your Renewal as a Planning Opportunity

Your mortgage renewal is one of the easiest times to make changes:

• You can switch lenders without penalty
• You can adjust your structure (term, amortization, etc.)
• Lenders are actively competing for strong borrowers

This makes it an ideal time to step back and review your full financial picture, not just your mortgage terms.

Bottom Line

In 2026, the conversation around mortgages is shifting.

It’s no longer just about finding the lowest rate.

It’s about making sure your entire debt structure works together — especially as payments reset to higher amounts.

If your mortgage is coming up for renewal this year, taking a broader view can make a meaningful difference in both your monthly cash flow and long-term financial position.

Reach out if you want to look at a strategy for your situation.

Today, the Bank of Canada held its overnight rate at 2.25% for the second consecutive decision in 2026. No surprise — markets had priced in a hold at over 92% odds heading into the announcement — but the backdrop is anything but boring.

The World Got Complicated Fast

Three months ago, the story was simple: 2026 was supposed to be a stable, predictable rate environment. That's no longer true.

Canada is now balancing a surprise spike in unemployment, weak economic growth, and fresh inflation risk from a global oil price shock driven by conflict in the Middle East. Iran's actions in the Persian Gulf sent oil prices sharply higher, with Brent crude briefly topping US$100/barrel. That kind of supply shock creates a real headache for a central bank trying to keep inflation near its 2% target.

TD Economist Maria Solovieva summed up the bind well: risks to growth are tilted to the downside, while inflation risks have gone up due to higher energy prices.

What Economists Are Actually Saying

The big banks are largely aligned: Oxford Economics, CIBC, RBC, BMO, and TD all project the Bank of Canada's policy rate will hold at 2.25% through the end of 2026 — though some, including Scotiabank, have started pencilling in hikes toward year-end if inflation doesn't cooperate.

Desjardins deputy chief economist Randall Bartlett put it plainly — the economy was weak but not weak enough to force the Bank's hand in either direction, and the oil price shock, if temporary, will likely be looked through.

That said, a hike is no longer off the table. Markets are now pricing in a rate increase before year-end, something that was essentially impossible to imagine three months ago.

What This Means for Your Mortgage

If you have a variable-rate mortgage, nothing changes today. Your payments stay the same. But understand the environment you're sitting in — the next move could be up, not down.

If you're coming up for renewal, this is not the moment to drift. Around 33% of Canadian mortgage holders are expected to face higher monthly payments by the end of 2026, with fixed-rate borrowers renewing this year seeing payment increases averaging around 20% as pandemic-era low rates expire.

If you're shopping for a fixed rate, watch bond yields more than the Bank of Canada. Bond yields have already moved higher because of the Iran conflict — fixed mortgage rates can rise even when the overnight rate sits still.

The Bottom Line

The rate held. The uncertainty didn't. Whether you're buying, renewing, or refinancing, the window to get clarity on your mortgage strategy is now — before the next announcement on April 29th, which lands alongside the Bank's full Monetary Policy Report.

If you want to run through your options, I'm here. Reach out, and let's make sure your mortgage is working for you in whatever environment comes next.