Canadian Mortgage Trends Housing and Interest Rate Forecasts for 2026

Economists expect a gradual housing recovery in 2026 as lower interest rates support demand, while affordability constraints and supply challenges keep price growth in check.

As 2026 begins, Canada’s housing market appears to be finding its balance after several turbulent years. Rate cuts over the past year have eased some of the pressure on borrowers and helped stabilize sales activity, particularly in markets that cooled the most during the downturn. At the same time, price growth has remained relatively contained, reflecting ongoing affordability challenges and limited supply.

Looking ahead, most forecasters expect the recovery to continue, but at a measured pace. While lower borrowing costs should support demand, higher household debt loads, renewal pressures and uneven regional conditions are expected to keep the market from overheating.

Below is a snapshot of the latest housing and interest rate forecasts for 2026 from major real estate firms and bank economists.

2026 Real estate market
The Canadian Real Estate Association (CREA)

• Home sales forecast: 509,479 (+7.7% year-over-year)

✓ Commentary: “Since March 2025, home sales activity has been on a steady upward climb,” CREA said, adding that demand was “delayed and dampened, but not derailed.”

• Home price forecast: $698,622 (+3.2%)

Royal LePage house price forecast by Q4: $823,016 (+1% year-over-year); Re/Max national average price outlook: -3.7% year- over-year & national home sales outlook: +3.4% year-over-year; RBC Economics home resales forecast by Q4: 502,300 (+6.7% year-over-year) & home price forecast by Q4: $812,700 (-0.9%);

TD Economics home price growth forecast: +4.1%.

2026 interest rate forecasts
As we look ahead to 2026, the focus has shifted from how quickly the Bank of Canada might cut rates to how long it will remain on hold, and when the next move could eventually be higher.

Most major banks expect the overnight rate to sit at 2.25% through much of 2026, reflecting a central bank that is broadly comfortable with inflation progress but cautious about declaring victory. After a sharp easing cycle in 2024 and early 2025, policy-makers are widely expected to adopt a wait-and-see approach, guided by incoming inflation and labour-market data.

By late 2026, however, forecasts begin to diverge. Scotiabank and National Bank, for example, see the policy rate edging higher by the fourth quarter, while RBC projects rate hikes extending into 2027, with the overnight rate rising back toward 3.25%.

TD expects the policy rate to remain unchanged through the end of 2027. CIBC and BMO’s latest published forecasts also point to rates holding steady through 2026, though neither has released formal projections beyond that point.

The implication for borrowers is a more stable, but not permanently lower, rate environment. Variable-rate relief appears largely behind us, with the next phase likely defined by an extended hold rather than further cuts. Fixed mortgage rates may also face upward pressure over time as markets begin to price in the possibility of future tightening.

In short, 2026 is shaping up as a year of rate stability, but with growing discussion around what comes next as the economic cycle matures.

Candace Perko, Mortgage Broker