As we head into the final weeks of 2025, it’s a great time to take a step back and look at where the mortgage and housing markets stand. This year has marked a much-needed shift toward stability: rates have eased from their highs, the housing market has settled into a more balanced pace, and many Canadians are feeling a bit more certainty in their financial planning. At the same time, the outlook for 2026 is shaping up to be steady, predictable, and refreshingly “normal” after several turbulent years.
Here’s an overview of the current market landscape and the outlook economists are forecasting for 2026.
Mortgage Rates & Today’s Landscape
2025 has brought a noticeable change in tone. With inflation trending back toward the Bank of Canada’s 2% target, the Bank has been able to reduce its policy rate gradually throughout the year. Bond yields have also cooled, which has helped bring down fixed rates.
Most competitive insured 5-year fixed rates are now landing in the high-3% to low-4% range. Variable-rate borrowers have also benefited from a series of prime rate reductions, seeing effective rates settle in the mid-3% range depending on lender and discount.
While we aren’t returning to the ultra-low pandemic rates, borrowing costs have come back to a healthier, more sustainable level, giving homeowners and buyers more room to plan with confidence.
Housing Market Conditions
The housing market throughout 2025 has been stable, measured, and far less frantic than the years prior. Sales have softened slightly, price growth has levelled off, and many markets have seen a return to balanced conditions.
Buyers have had more space to think and negotiate, while sellers have been adjusting expectations to match the slower pace. Builders have pulled back on new construction, which will limit upcoming supply, and may support prices in the longer term as the population continues to grow.
Overall, the year has been calm, steady, and predictable, a welcome change after the highs and lows of recent years.
Renewals: What Homeowners Are Seeing
Homeowners renewing in 2025 and 2026 are still facing higher payments than their original pandemic-era terms, but the adjustment is now much more manageable. With rates steadily decreasing this year, the expected “payment shock” has been significantly reduced.
This has created an opportunity for many borrowers to reassess their mortgage strategy, whether it’s comparing rates across lenders, considering fixed versus variable options, or looking at amortization adjustments to help regulate monthly cash flow.
Starting the conversation early remains the best way to ensure a smooth renewal process.
Looking Ahead to 2026
Most forecasts suggest that 2026 will continue the trend toward stability. Economists expect interest rates to hold within a normal range, neither spiking nor dropping dramatically. Fixed rates are projected to hover around the low-4% mark, while variable rates will track modest movements in prime.
The housing market is also expected to gradually strengthen. National forecasts point to modest price and sales growth as confidence improves and borrowing costs remain manageable.
Put simply, 2026 is shaping up to be a year of steadiness: a balanced market and predictable rate environment that should support thoughtful planning.
As We Wrap Up the Year
Thank you for being part of my community this past year. We hope this update helps you feel informed and empowered heading into the new year.
Wishing you and your loved ones a warm holiday season, and a healthy, happy, and prosperous start to 2026.
