As we settle into the new year, I want to start by wishing you and your loved ones a happy, healthy, and steady year ahead. After the volatility of the past few years, stability has become something many of us truly value.
With 2025 now behind us, this feels like a natural moment to pause, reflect on what shaped Canada’s mortgage and housing markets over the past year, and look ahead at what 2026 may bring.
2025 Recap: Some Relief, but No Return to “Normal”
If 2024 marked the turning point for interest rates, 2025 was more about gradual relief and adjustment.
The Bank of Canada lowered its policy rate four times over the course of the year, bringing it from 3.25% down to 2.25% by late October, where it remained through year-end. Prime rates followed suit, offering welcome — though measured — relief for variable-rate borrowers.
Inflation stayed close to the Bank of Canada’s 2% target for much of the year, which helped ease pressure on everyday costs and gave policymakers room to lower rates without reigniting inflation concerns. While economic growth was uneven, Canada largely avoided a sharp downturn, supported by resilient employment and steady consumer spending.
Lower borrowing costs encouraged more buyers to re-enter the housing market, particularly through the spring and summer. National home sales trended higher compared with early 2025, and prices posted modest year-over-year gains. That said, affordability remained stretched in many regions, reinforcing the idea that the market was finding balance — not accelerating rapidly.
Housing supply and affordability also stayed front and centre for governments and regulators throughout the year. Budget 2025 included measures such as the expansion of the GST rebate for new purpose-built rental housing and changes aimed at improving access to insured mortgages. These initiatives are intended to support housing construction and ease affordability pressures over time, though their impact will continue to unfold.
Looking Ahead to 2026: A Steadier Year, with Fewer Surprises
As we move into 2026, the outlook is measured but constructive.
Most economists expect the Bank of Canada to remain on hold for much of the year, with limited room for further rate cuts unless economic conditions weaken meaningfully. Mortgage rates may drift modestly lower, but significant declines are unlikely. After years of volatility, this points to a more stable rate environment.
Housing activity is also expected to remain steady rather than surge. Pent-up demand and gradual affordability improvements should continue to support sales, but headwinds remain. Policy uncertainty, shifting immigration patterns, and softness in parts of the condominium market could weigh on activity in some regions, while tight supply is likely to limit broad price declines.
As a result, price growth in 2026 is expected to be modest and highly regional.
For many households, this will be an important year for decision-making — particularly for those facing mortgage renewals after locking in much lower rates several years ago. Planning ahead and reviewing options early will be especially important.
Here to Help You Plan for the Year Ahead
Whether you’re thinking about buying, renewing, refinancing, or simply want a clearer picture of your options, I’m here to help.
Often, a short conversation early in the year can make a meaningful difference later on. If you’d like to review your situation or talk through what 2026 could look like for you, feel free to reach out anytime.
Here’s to a steady, informed, and successful year ahead.