The Bank of Canada (BoC) announced that it is keeping the overnight rate at 2.25%, the Bank Rate at 2.5% and the deposit rate at 2.20%. The bank cited the Iran war as a major source of uncertainty, noting that it has pushed energy prices further and "heightened the risks to the global economy."
CIBC economists warn that Canada's housing market is in "worse shape than believed," describing the current economics of homebuilding as "simply broken". In a report released on February 18, 2026, deputy chief economist Benjamin Tal and Katherine Judge argue that the market has reached a dysfunctional state where prices remain too high for buyers to afford, yet are not high enough to make new construction profitable for developers.
Overstated Housing Starts: CIBC warns that official figures from the Canada Mortgage and Housing Corp. (CMHC, INC.) are misleading. While 2025 data showed a 5.6% rise in housing starts, these figures often reflect projects where construction was decided years ago. Real-time activity in hubs like Toronto and Vancouver may be 50% and 30% lower, respectively, than headline statistics suggest.
The "negative wealth effect" of falling home values is expected to curb household spending as owners can no longer easily tap into home equity. Tal suggests we are in the early stages of a correction that will weigh heavily on Canada's GDP throughout 2026.
The high-rise condo market is particularly hard-hit. In Ontario, condo prices have dropped roughly 22% from their peak, with CIBC forecasting a further 10% to 15% decline before the market clears.
High financing costs, labor shortages, and municipal development charges have made many projects unfeasible. Tal calls for immediate government action to "slash" development charges rather than conducting more research.
CIBC and CMHC projections indicate a "transition year" for the housing market, marked by slow growth and shifting household dynamics. Canada's economy is expected to grow by only 0.7% in 2026 due to trade tensions and high unemployment. Ontario is the only region expected to see continued price declines through 2026, while other regions like the Prairies may remain above historical averages.
"Doubling Up" Trend: Affordability issues are leading to an increase in multi-family households. CIBC estimates "doubling up" rates could reach 30% in Toronto and Vancouver, masking the true depth of the housing shortage.
Overstated Housing Starts: CIBC warns that official figures from the Canada Mortgage and Housing Corp. (CMHC, INC.) are misleading. While 2025 data showed a 5.6% rise in housing starts, these figures often reflect projects where construction was decided years ago. Real-time activity in hubs like Toronto and Vancouver may be 50% and 30% lower, respectively, than headline statistics suggest.
The "negative wealth effect" of falling home values is expected to curb household spending as owners can no longer easily tap into home equity. Tal suggests we are in the early stages of a correction that will weigh heavily on Canada's GDP throughout 2026.
The high-rise condo market is particularly hard-hit. In Ontario, condo prices have dropped roughly 22% from their peak, with CIBC forecasting a further 10% to 15% decline before the market clears.
High financing costs, labor shortages, and municipal development charges have made many projects unfeasible. Tal calls for immediate government action to "slash" development charges rather than conducting more research.
CIBC and CMHC projections indicate a "transition year" for the housing market, marked by slow growth and shifting household dynamics. Canada's economy is expected to grow by only 0.7% in 2026 due to trade tensions and high unemployment. Ontario is the only region expected to see continued price declines through 2026, while other regions like the Prairies may remain above historical averages.
"Doubling Up" Trend: Affordability issues are leading to an increase in multi-family households. CIBC estimates "doubling up" rates could reach 30% in Toronto and Vancouver, masking the true depth of the housing shortage.
TD Economics Lowers Expectations for Canadian Housing in 2026
The spring housing market is seeing a chill as TD Economics officially shifted its forecast, now projecting a decline in both national home sales and prices for 2026. This is a significant pivot from the growth anticipated just a few months ago.
While the national average price is expected to edge down slightly by 0.3%, the real story lies in the regional divide. High-cost hubs like Ontario and BC are facing the sharpest corrections, while the Prairies and Atlantic Canada continue to show resilience due to better affordability and tighter supply.
Province Projected Price Change (2026)
Ontario -4.0%
British Columbia -1.2%
Quebec +0.1%
Nova Scotia +0.8%
Manitoba +1.5%
Saskatchewan +1.9%
New Brunswick +2.1%
Alberta +2.4%
PEI +2.6%
Newfoundland & Labrador +3.4%
The downgrade follows a lackluster start to the year. With near-zero population growth recently recorded and persistent cost-of-living pressures, many buyers in expensive markets are "waiting for the bottom" before jumping back in.
TD expects this to be a temporary dip, with a projected 9.6% surge in sales activity for 2027 as the economy stabilizes.
Is your local market feeling the cooldown, or are you seeing steady demand?
The spring housing market is seeing a chill as TD Economics officially shifted its forecast, now projecting a decline in both national home sales and prices for 2026. This is a significant pivot from the growth anticipated just a few months ago.
While the national average price is expected to edge down slightly by 0.3%, the real story lies in the regional divide. High-cost hubs like Ontario and BC are facing the sharpest corrections, while the Prairies and Atlantic Canada continue to show resilience due to better affordability and tighter supply.
Province Projected Price Change (2026)
Ontario -4.0%
British Columbia -1.2%
Quebec +0.1%
Nova Scotia +0.8%
Manitoba +1.5%
Saskatchewan +1.9%
New Brunswick +2.1%
Alberta +2.4%
PEI +2.6%
Newfoundland & Labrador +3.4%
The downgrade follows a lackluster start to the year. With near-zero population growth recently recorded and persistent cost-of-living pressures, many buyers in expensive markets are "waiting for the bottom" before jumping back in.
TD expects this to be a temporary dip, with a projected 9.6% surge in sales activity for 2027 as the economy stabilizes.
Is your local market feeling the cooldown, or are you seeing steady demand?
The 2026 Mortgage Cliff: What TD’s Latest Housing Forecast Means for Your Renewal 🏠📉
With TD Economics officially revising its 2026 outlook to project falling home prices—specifically a 4.0% drop in Ontario and a 1.2% dip in British Columbia—homeowners approaching mortgage renewals are facing a new set of variables.
If you bought at the peak of the market or are coming off a low-rate fixed term from five years ago, the "wealth effect" is shifting. Here is how the projected price correction impacts your renewal strategy:
1. The Equity Squeeze
Falling prices mean lower home appraisals. If your property value drops while your loan balance remains high, your Loan-to-Value (LTV) ratio increases.
The Risk: If your equity dips below 20%, you may lose the ability to "switch" lenders to hunt for better rates, as you could be treated as a high-ratio borrower requiring mortgage insurance.
The Strategy: If you have extra cash, consider a lump-sum prepayment before renewal to maintain a healthy equity cushion.
2. The "Wait and See" Variable Rate
TD notes that many buyers are "waiting for the bottom." For those renewing, this creates a dilemma: lock in a fixed rate now or ride a variable rate?
The Trend: If prices continue to slide through 2026, the Bank of Canada may face more pressure to adjust policy to stimulate the economy.
The Strategy: A shorter-term fixed rate (2 or 3 years) might be the "sweet spot," providing stability while allowing you to renew again when TD predicts the market will surge in 2027.
3. Rental Property Challenges
With TD citing near-zero population growth as a factor in cooling demand, investor-owners in Ontario and BC may see softer rental growth.
The Risk: Higher renewal rates combined with stagnant or falling property values can lead to negative cash flow.
The Strategy: Review your portfolio’s debt-service ratio now. It may be time to prioritize debt reduction over acquisition until the projected 2027 rebound.
The Bottom Line
The 2026 market isn't about rapid gains; it's about defensive positioning. While TD predicts a 9.6% jump in sales for 2027, the next 12 months require a sharp eye on your home’s valuation.
With TD Economics officially revising its 2026 outlook to project falling home prices—specifically a 4.0% drop in Ontario and a 1.2% dip in British Columbia—homeowners approaching mortgage renewals are facing a new set of variables.
If you bought at the peak of the market or are coming off a low-rate fixed term from five years ago, the "wealth effect" is shifting. Here is how the projected price correction impacts your renewal strategy:
1. The Equity Squeeze
Falling prices mean lower home appraisals. If your property value drops while your loan balance remains high, your Loan-to-Value (LTV) ratio increases.
The Risk: If your equity dips below 20%, you may lose the ability to "switch" lenders to hunt for better rates, as you could be treated as a high-ratio borrower requiring mortgage insurance.
The Strategy: If you have extra cash, consider a lump-sum prepayment before renewal to maintain a healthy equity cushion.
2. The "Wait and See" Variable Rate
TD notes that many buyers are "waiting for the bottom." For those renewing, this creates a dilemma: lock in a fixed rate now or ride a variable rate?
The Trend: If prices continue to slide through 2026, the Bank of Canada may face more pressure to adjust policy to stimulate the economy.
The Strategy: A shorter-term fixed rate (2 or 3 years) might be the "sweet spot," providing stability while allowing you to renew again when TD predicts the market will surge in 2027.
3. Rental Property Challenges
With TD citing near-zero population growth as a factor in cooling demand, investor-owners in Ontario and BC may see softer rental growth.
The Risk: Higher renewal rates combined with stagnant or falling property values can lead to negative cash flow.
The Strategy: Review your portfolio’s debt-service ratio now. It may be time to prioritize debt reduction over acquisition until the projected 2027 rebound.
The Bottom Line
The 2026 market isn't about rapid gains; it's about defensive positioning. While TD predicts a 9.6% jump in sales for 2027, the next 12 months require a sharp eye on your home’s valuation.
Canadian fixed #mortgage rates have risen significantly as of April 2026 due to the escalating conflict in the Middle East.
Three- and five-year fixed rates have jumped by approximately 0.25% to 0.50% in the weeks following the start of the conflict.
As of early April 2026, average five-year fixed rates have moved from approximately 4% to 4.95%.
The lowest advertised five-year fixed insured rates now sit around 3.89% to 4.09%, up from roughly 3.79% in February.
:
The conflict led to the closure of the Strait of Hormuz, a critical oil transit chokepoint, driving global oil prices to around $100 per barrel.
Higher energy costs act as a major inflationary threat, which investors fear will force central banks to keep interest rates higher for longer. Fixed mortgage rates are priced based on Government of Canada bond yields, not directly by the Bank of Canada.
The five-year bond yield surged above 3.3% recently—its highest point since late 2024—as investors sold off bonds in anticipation of higher inflation.
Despite rising fixed rates, the (Bank of Canada held its key overnight rate at 2.25% on March 18, 2026.
This hold has kept variable mortgage rates relatively stable (averaging 3.35% to 4.2%), creating a rare environment where variable rates are lower than fixed rates.
Approximately 1.4 million mortgages are set for renewal by the end of 2026. Homeowners renewing this year may face "sticker shock" as they move from lower pandemic-era rates to these new, conflict-driven highs.
https://www.cbc.ca/news/canada/iran-war-mortgage-rates-canada-9.7152182
Three- and five-year fixed rates have jumped by approximately 0.25% to 0.50% in the weeks following the start of the conflict.
As of early April 2026, average five-year fixed rates have moved from approximately 4% to 4.95%.
The lowest advertised five-year fixed insured rates now sit around 3.89% to 4.09%, up from roughly 3.79% in February.
:
The conflict led to the closure of the Strait of Hormuz, a critical oil transit chokepoint, driving global oil prices to around $100 per barrel.
Higher energy costs act as a major inflationary threat, which investors fear will force central banks to keep interest rates higher for longer. Fixed mortgage rates are priced based on Government of Canada bond yields, not directly by the Bank of Canada.
The five-year bond yield surged above 3.3% recently—its highest point since late 2024—as investors sold off bonds in anticipation of higher inflation.
Despite rising fixed rates, the (Bank of Canada held its key overnight rate at 2.25% on March 18, 2026.
This hold has kept variable mortgage rates relatively stable (averaging 3.35% to 4.2%), creating a rare environment where variable rates are lower than fixed rates.
Approximately 1.4 million mortgages are set for renewal by the end of 2026. Homeowners renewing this year may face "sticker shock" as they move from lower pandemic-era rates to these new, conflict-driven highs.
https://www.cbc.ca/news/canada/iran-war-mortgage-rates-canada-9.7152182
CBC
How the war in the Middle East is already impacting mortgage rates in Canada | CBC News
The ongoing war in Iran and the closure of the Strait of Hormuz are impacting Canadian pocketbooks in ways we might not expect. Experts warn Canadian homeowners facing mortgage renewals that rates are going up, despite the Bank of Canada holding its key interest…
The Bank of Canada April 29th announcement brought a familiar sense of "wait and see," but with a sharp new warning: the era of rate stability may be fragile. While the Bank held the policy rate at 2.25%, Governor Tiff Macklem didn’t mince words. The message was clear: if global oil prices continue to surge, the Bank is prepared to pivot from holding steady to a path of consecutive rate hikes.
Canada finds itself in a unique position. As a net exporter of energy, higher oil prices are a boon for our national income and trade balance. However, for the average Canadian consumer and business owner, the reality is far more punishing. Higher prices at the pump don't just affect commuters; they leak into the supply chain, raising the cost of transporting everything from groceries to construction materials. If these costs become "entrenched"—meaning they lead to a generalized rise in prices across the board—the Bank’s hand will be forced.
2.25% (4th consecutive hold). CPI hit 2.4% in March, with a projected peak of 3% in April. The Bank is banking on oil moderating to US$75/barrel by mid-2027. If we stay significantly above that, the "baseline" evaporates.
What makes this moment particularly complex is the "downside risk." While oil threatens to push rates up, the looming CUSMA review and potential U.S. trade restrictions act as a counterweight. If trade barriers slow the economy too much, the Bank might actually need to cut rates to prevent a recession.
We are currently watching a tug-of-war between energy-driven inflation and trade-driven stagnation.
For those of us in the business community, this signals a need for agility in capital planning.
The window of "predictable" rates might be closing. If your projects rely on floating rates, now is the time to stress-test your numbers against a 50–75 basis point increase.
If you haven’t already, look at how sensitive your margins are to fuel surcharges.
Consumer Sentiment: Watch for a dip in discretionary spending as gas prices eat into household budgets this summer.
The Bank of Canada is no longer just watching domestic data, they are watching global headlines. All eyes are now on the June 10th announcement.
Canada finds itself in a unique position. As a net exporter of energy, higher oil prices are a boon for our national income and trade balance. However, for the average Canadian consumer and business owner, the reality is far more punishing. Higher prices at the pump don't just affect commuters; they leak into the supply chain, raising the cost of transporting everything from groceries to construction materials. If these costs become "entrenched"—meaning they lead to a generalized rise in prices across the board—the Bank’s hand will be forced.
2.25% (4th consecutive hold). CPI hit 2.4% in March, with a projected peak of 3% in April. The Bank is banking on oil moderating to US$75/barrel by mid-2027. If we stay significantly above that, the "baseline" evaporates.
What makes this moment particularly complex is the "downside risk." While oil threatens to push rates up, the looming CUSMA review and potential U.S. trade restrictions act as a counterweight. If trade barriers slow the economy too much, the Bank might actually need to cut rates to prevent a recession.
We are currently watching a tug-of-war between energy-driven inflation and trade-driven stagnation.
For those of us in the business community, this signals a need for agility in capital planning.
The window of "predictable" rates might be closing. If your projects rely on floating rates, now is the time to stress-test your numbers against a 50–75 basis point increase.
If you haven’t already, look at how sensitive your margins are to fuel surcharges.
Consumer Sentiment: Watch for a dip in discretionary spending as gas prices eat into household budgets this summer.
The Bank of Canada is no longer just watching domestic data, they are watching global headlines. All eyes are now on the June 10th announcement.
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The GTA real estate market is officially in a holding pattern. According to the latest TRREB stats, average prices dipped 5.1% year-over-year to $1,006,409, while sales fell 9%. Active buyers are finding themselves in a rare position of strength with more choice and room to negotiate.