Housing And Interest Rates
Economists expect a gradual housing recovery in 2026 as lower interest rates support demand.
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.
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.
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.
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