For buyers, sellers and those renewing their mortgage at the start of 2026, Canada’s housing market faces a very different interest rate environment compared to a year ago, with economists in general agreement that the Bank of Canada (BoC) is likely in a holding pattern.
“We don’t see the Bank of Canada moving at all,” CIBC economist Benjamin Tal told Yahoo Finance Canada in an interview. Mortgage rates, he adds, are likely at the lowest they will go.
That’s a far cry from a year ago, when further cuts were expected, mortgage rates were assumed to be on the decline and trade wars and related economic uncertainty — stemming from the policies of U.S. President Donald Trump — were still hypothetical.
Yahoo Finance Canada spoke with experts about how Canadians should handle different real estate scenarios in a year where rates, sales and prices are expected to remain more or less static. Their guidance, however, comes with a key caveat: trade disputes are no longer hypothetical, with U.S. unpredictability the wild card as the review of the Canada-U.S.-Mexico Agreement (CUSMA) nears.
“If we are all wrong and there’s going to be a major trade dispute… that’s something that will be recessionary for the Canadian economy and then all bets are off,” Tal noted.
The psychology of the market has shifted significantly. Asking rents in many markets remain high, but national average rents hit a 30-month low in December. That, coupled with high inventory and low expectations for price movement, takes much of the urgency away.
“People are not rushing and that’s a good thing,” Tal said. “That’s a normal market as opposed to a market that was panicking until very recently.”
This patience is vital in the condo sector, where a glut of inventory, most prominently in the Greater Toronto Area, has created a buyer’s market that demands strategic thinking. While prices in some markets may decline further in 2026, Royal LePage CEO Phil Soper advises buyers to factor that equity erosion into their offer. “It’s not hard math. It’s a little bit of spreadsheet work.”
Soper offers some comfort to homeowners reeling from sliding property values — price drops are actually a gift to the up-sizer. If your market has seen a correction across the board, the dollar gap between your current home and your “forever” home is narrowing.
“Mathematically, you’re winning,” he noted.
This shift and significant inventory mean the “buy first” obligation of the pandemic era has been replaced by a “sell first” mandate. Soper advises listing first to secure a firm sale, knowing the inventory is there waiting for you. On the other hand, Tal cautions that the equity buffer many move-up buyers rely on to fund the transition has evaporated for recent owners.
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