Weekly Market Pulse

December 8, 2025

Weekly Market Pulse

This week I am paying more attention to how the middle of the curve firmed while credit spreads continued to tighten. Here’s what caught my attention, particularly as I think about portfolio positioning heading into the winter leasing cycle. I’m seeing stability return to parts of the rate structure that had been erratic earlier in the year, and that shift is influencing how I’m evaluating both refinancing windows and acquisition timelines.

Featured Metric

This week I am focusing on the 5-year Government of Canada bond, since it sits at the centre of most underwriting decisions I make. The 5-year closed at about 3.05 percent, which is up roughly 22 basis points (bps) on the week, and that small move has a mechanical effect on valuation for anyone relying on conventional takeout financing. Let me explain why this matters. A 10 bps shift in the benchmark, when translated into a typical lender spread of 200 bps, can raise the all-in cost of debt on a five million dollar loan by about five thousand dollars annually, simply because the coupon resets higher. That might seem minor, but when I underwrite at scale across multiple properties, those incremental debt service changes influence both DSCR headroom and my comfort around exit cap assumptions. I’m also watching how this yield interacts with lender pricing because the 5-year remains the reference point for nearly every multifamily mortgage quote I receive.

Yield Curve Analysis

The curve continues to show a slight but persistent steepening, with the 3-year sitting near 2.79 percent and the 10-year holding around 3.45 percent. The spread is still narrow compared to long-term averages, yet the direction matters more to me than the absolute level. When the front end holds steady but the long end drifts up, it usually signals that markets are repricing medium-term growth and inflation, which feeds directly into how investors judge risk premiums for real assets. I believe part of this movement reflects expectations that policy rates will stay anchored for longer than many anticipated, which should influence how maturities are staggered.

Current Financing Environment

The current environment remains stable. Uninsured 5-year mortgage money is around 4.49 percent, while adjustable products tied to the prime rate remain unchanged, with prime still at roughly 4.45 percent and lenders quoting discounts in the range of prime minus 0.30 to prime minus 0.65 depending on the risk profile. When I compare this to historical norms, none of these figures seem expensive, yet they aren’t cheap enough to create cap-rate compression on their own. For context, the CMLS 5-year closed product remains near 3.99 percent, and spreads on high-grade corporate credit have tightened slightly, with BBB 5-year paper around 87 bps over the curve. This backdrop makes today’s financing more predictable than it was a quarter ago, which I value because predictability often matters more than absolute pricing in my opinion.

Market Signals

The Bank of Canada’s policy rate is unchanged at 2.25 percent, and that stability is beginning to feed into both lender sentiment and borrower behaviour. Housing starts are 232,765 units, and I’m watching this metric closely because the month over month and multi-month movements tell a more important story than the headline level. The latest print shows a 16.6 percent decline month over month, and the six month trend is also down 16.5 percent, which signals that construction momentum is weakening rather than stabilizing. When both short-term and medium-term changes contract at this scale, I understand this to mean that developers are not initiating enough projects to offset population growth or rental absorption, and that imbalance often creates upward pressure on rents in the markets where I operate. It is important never to look at real estate in isolation, and housing starts remain one of the earliest indicators of future supply conditions, which directly feeds into my underwriting assumptions on rent growth and vacancy.

Macro Context

The broader markets were constructive this week, with the TSX moving to around 31,313 and the S&P 500 pushing near 6,875. Equity strength often signals improving risk tolerance, and when paired with a lower volatility regime, as shown by the MOVE index (volatility) settling at about 72, I interpret this as an environment where capital allocators grow more comfortable taking duration risk. Oil ticked up to about 58.88 dollars, and the Canadian dollar firmed slightly to roughly 0.7216, which together support a modest lift in economic sentiment. These macro factors influence rental demand indirectly, since stronger labour markets and consumer confidence tend to support absorption, particularly in professionally managed multifamily. These are the same data points I review every week, and I’ve found that tying them back to tenant behaviour gives me a clearer picture of underlying fundamentals.

Bottom Line

Overall, the market feels orderly, reasonably priced, and directionally stable. I wouldn’t describe it as cheap, yet I also wouldn’t describe it as hostile to disciplined investors. The risks remain concentrated around medium-term rate movements and the pace of new construction, but the week’s data has reinforced my view that measured, deliberate positioning is more valuable right now than aggressive expansion. I’m observing, adjusting, and aligning my next steps with what the numbers actually show rather than what headlines might imply.

Important Disclosures

This analysis is provided for informational and educational purposes only and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. The content represents my personal views and analysis of market conditions as of November 24, 2025, and should not be construed as a recommendation to buy, sell, or hold any particular investment or security. Past performance is not indicative of future results. Real estate investments involve substantial risk, including but not limited to: market risk, interest rate risk, liquidity risk, leverage risk, and the potential for total loss of capital. Market conditions, interest rates, government policies, and economic factors can change rapidly and materially affect investment outcomes. The interest rates, spreads, and market data referenced herein are subject to change without notice and may not reflect the rates or terms available to all investors. Actual financing terms will vary based on individual creditworthiness, property characteristics, loan-to-value ratios, and lender-specific underwriting criteria. All investors should conduct their own due diligence and consult with qualified legal, tax, and financial advisors before making any investment decisions. This content does not take into account your specific investment objectives, financial situation, or particular needs. No warranty or guarantee is provided regarding the accuracy, completeness, or timeliness of the information presented. While data sources are believed to be reliable, errors and omissions may occur. Market data and economic indicators are subject to revision. Real estate investments are illiquid and may not be suitable for all investors. Leverage amplifies both gains and losses. Forward-looking statements and market predictions are speculative in nature and involve known and unknown risks and uncertainties.