For years, Canadians got used to one broad trend: interest rates kept falling.

Mike Moffatt, writing in The Globe and Mail, argues that this era may be ending. He is not saying rates will rise every year. They will move up and down. His point is that some of the forces that pushed borrowing costs lower for decades are now moving in the opposite direction.

For housing and construction, that matters.

The latest increase in borrowing costs has some immediate causes. Higher energy prices linked to the conflict around the Strait of Hormuz have raised transportation and production costs. That affects much more than what motorists pay at the pump. Diesel, shipping, equipment and materials all feed into the cost of putting up a building.

But the bigger story goes beyond the current crisis.

Why Rates May Stay Higher

Through much of the 1990s and 2000s, the world had a lot of savings chasing investments.

Baby Boomers were in their peak earning years and putting money aside. China was becoming a manufacturing powerhouse and accumulating large amounts of capital. Governments were borrowing less. At the same time, digitization reduced some of the economy’s dependence on expensive physical infrastructure.

That helped push interest rates down.

Now several of those forces are reversing.

Baby Boomers are retiring and drawing down savings. Aging populations are putting more pressure on public spending for health care and pensions. Governments are borrowing heavily again for infrastructure, defence and other priorities. China is using more capital at home, while the technology sector is investing enormous amounts in AI infrastructure and data centres.

More demand for capital means more competition for money.

That does not guarantee permanently high rates. But it does make the ultra-cheap borrowing environment of the past less likely.

Canada is not immune. As of September 2026, the Bank of Canada policy rate remained at 2.25%, while inflation, energy costs and trade uncertainty remained concerns. More importantly, construction loans and longer-term mortgages are influenced by much more than the overnight rate. Bond markets, lender risk, inflation expectations and global capital conditions all matter.

What This Means for Nova Scotia Construction

For a developer, financing is not a side issue. It can decide whether a project gets built at all.

Concrete still has to be poured. Elevators still have to be bought. Electricians, plumbers and carpenters still need to be paid. Land, consultants, municipal requirements and insurance do not disappear because interest rates go up.

Higher borrowing costs simply get added on top. What Perennial Rising Interest …

During construction, developers carry large loans before the building produces any income. Every extra month adds financing cost. Once a rental project is complete, higher permanent financing rates can also reduce the amount of debt the building’s income can support.

The result may be more equity, redesign, cost cutting, delays or, in some cases, a project that no longer works financially.

That is worth watching in Halifax.

CMHC reported 3,060 housing starts from January through August 2026, compared with 4,966 over the same period in 2025, a decline of 38%. At the end of August, about 14,400 units were under construction, with another 2,785 permitted units that had not yet started. What Perennial Rising Interest …

Interest rates alone did not cause that decline. Demand, land, labour, approvals, construction costs and individual financing arrangements all matter.

But expensive money makes every other problem harder.

The Property-Tax Problem

There is another pressure that deserves more attention: the growing reliance on property taxation to finance municipal responsibilities.

Halifax is heavily dependent on this revenue source.

HRM’s 2025-26 budget says roughly 82% of municipal revenue comes from residential, commercial and resource property taxes, tax agreements and payments in lieu of tax. That money supports services such as police, fire and emergency services, transit, public works, parks and recreation.

This is not unusual in Nova Scotia. Property tax is the main revenue source for most municipalities and accounts for more than 75% of revenue in many of them.

There are good reasons for that. Property is stable, visible and difficult to move somewhere else.

But there is still a legitimate question to ask:

Should property taxation remain the default source every time municipal costs and responsibilities grow?

That matters especially during a housing affordability crisis.

HRM’s municipal tax rate remained unchanged at 0.770 in 2025-26, yet the average municipal residential tax bill was projected to rise 4.7%, from $2,489 to $2,606, mainly because assessments increased. With other charges included, the average total bill rose from $3,589 to $3,774, an increase of 5.2%.

So even when the tax rate does not move, the amount people actually pay can still rise.

And property tax does not sit outside the housing equation.

For a homeowner, it is part of the cost of owning a home.

For a rental building, it is an operating expense.

For commercial property, it is another cost of doing business.

For a developer, it sits beside financing, construction, insurance, utilities and every other expense the completed project must ultimately support.

That creates a contradiction worth debating.

Governments want more housing and better affordability. At the same time, municipalities rely heavily on property to finance the services that come with growth. What Perennial Rising Interest …

The issue is not whether municipalities need revenue. Of course they do.

The question is whether too much of the cost of growth is being pushed back onto the same property base we are trying to make more affordable.

When Money Gets Expensive, Time Gets Expensive

Moffatt’s argument leaves governments and developers with an uncomfortable possibility.

Very cheap capital may not come back simply because we became used to it.

If borrowing costs stay structurally higher, housing policy cannot rely on lower interest rates to rescue affordability.

Every part of the development process matters more. Land cost. Construction productivity. Permitting. Infrastructure coordination. Taxation. And especially time.

That may be the most important lesson for Halifax.

When capital was exceptionally cheap, some inefficiency could be absorbed.

In a higher-rate world, there is much less room for it.

When money becomes more expensive, time becomes more expensive too. And eventually, someone has to pay for both.

#NovaScotia #Halifax #HalifaxConstruction #HousingAffordability #InterestRates #ConstructionCosts #PropertyTax #RealEstateDevelopment #HousingCrisis #Developers #BuildingIndustry #UrbanGrowth #EconomicPolicy #HousingSupply #MunicipalFinance #NovaScotiaHousing #HalifaxDevelopment #ConstructionFinance #CedarWhispers