The Bank of Canada ended the year by keeping its policy rate unchanged – a decision that was widely expected. What has caught attention however, is the central bank’s outlook for 2026. By stating that interest rates are currently ‘about the right level‘, the Bank is signaling that it sees no urgent need to lower 
borrowing costs in the near future.
That said, recent economic surprises – including a resilient labour market and a slight drop in unemployment – have led some financial markets to price in the possibility of a rate hike in 2026. While this sounds concerning, most economists, including BMO’s chief economist, still believe the most likely path forward, is for rates to remain steady, assuming inflation and economic growth stay under control.
Housing Market Outlook
For the housing market, stability may actually be welcome news. Canada’s real estate sector is not expected to rebound sharply in the short term, but major brokerages such as Royal LePage and RE/MAX Canada are forecasting a shift toward a more balanced market in 2026. As demand slowly returns and inventory tightens, modest price growth could follow – though this will vary significantly by region.
Royal LePage’s latest forecast describes 2026 as a ‘reset year‘, not a rebound. National home prices are expected to rise modestly, while higher-priced markets like Vancouver and Toronto may continue to see slight price declines.
The key takeaway?
2026 could be busier, but still fragile. Improved affordability may bring sidelined buyers back into the market, but economic uncertainty and regional differences meant that sound advice, smart mortgage structuring , and risk management will be more important than ever.
If you’re planning to buy, renew, or refinance in the coming year, contact us to help you understand how interest rate decisions affect your options. It can make all the difference!
Original Article: www.mpamag.com
