However, even if consumers are likely saving up more due to these expectations, BMO said that this is not necessarily a prelude to a surge of housing activity.

“While housing market activity could bottom soon given some recent easing in fixed mortgage rates and a conditional pause on policy rates, a hearty recovery is unlikely given still-poor affordability,” BMO said. “Canada’s economy looks to contract modestly in the first half of the year while registering 0.5% growth for all of 2023.”

The Bank of Canada is not likely to follow the US Federal Reserve’s lead when it comes to further rate hikes this year, but Canadian households are still likely to remain severely indebted “and thus, sensitive to higher loan costs, and do not benefit from 30-year fixed-rate mortgage terms,” BMO warned.

“Moreover, when the US economy spins in reverse, Canada usually gets vertigo, meaning it won’t be immune to the US debt ceiling drama.”