Monthly Market Update - January 15, 2026

As we begin a new year, the housing and mortgage markets remain challenged by uncertainty and hesitation. Mortgage rates have declined through the year, but appear to be leveling off. The housing market is a mixed story depending on where you are. Weakness in Toronto and Vancouver are offset by relative strength in Edmonton, Winnipeg, Saskatoon, Halifax and elsewhere.

Now that rates have leveled off, hopefully less time is spent speculating about interest rates. Those conversations can be unproductive and lead to distraction. This new found clarity about rates and the improved affordability we see today, should contribute to confidence that can help restore momentum.

The next Bank of Canada announcement is on January 28, but the market does not expect a change in rates. In fact, the market largely expects the Bank to hold rates steady for the next few months. Nevertheless, the good news is that Bank of Canada rates are now 1.0% lower than they were at the end of 2024.

Fixed mortgage rates in the high 3% to mid 4% range. This is a normal and healthy level for rates. We expect fixed mortgage rates to bounce around this range for the time being, but they will be sensitive to economic surprises which may be possible in the coming months.

If you are hesitant to step off the sidelines, let us arm you with the information you need to confidently make a decision. The more information you have, the better decision you will make. Homebuyers should run the numbers with their mortgage broker using today's rates to check their affordability. With rates now lower and house prices down in several markets, affordability has improved year-over-year. Buying power for homebuyers has increased materially - by over 20% in just the past two years. Not only can today's low rates benefit homebuyers but there can also be savings for existing borrowers looking to refinance out of a high rate mortgage or consolidate debts.

Those waiting for rates to materially drop further may be disappointed. No more excuses. The mortgage market is now in a readjustment phase as borrowers get used to this level of interest rates and home buyers and sellers try to determine the market price level.

Several mortgage lenders have lowered their rates in the past week. Be sure to work with an experienced broker with access to all the lenders so you can find these deals. Larger mortgage brokers, like Frank Mortgage, often have lender specials that are not advertised. For instance, we currently have five-year, fixed mortgage rates for borrowers with more than 20% down payment as low as 3.90% in some major markets.

In the housing market, sales were down in December on a national level month-over-month. Inventories remain high. The advantage is to the buyers today

Mortgage Market

The prime rate is 4.45%
The best nationally advertised mortgage rates are in the table below. There are often regional rates that are better, so check with your mortgage broker.

A graph showing the rate history of mortgage rates

The five year government bond yield is 2.85% today, 0.06% lower than last month. It peaked at 4.42% in October 2023.

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Mortgage Market Headlines

Variable mortgage rates held steady through the last month but can vary slightly based on lender margin requirements
Fixed mortgage rates for insured mortgages dropped and for uninsured mortgages increased. We may see these rates bounce around in the near term, depending on lender pricing expectations and competition
The central bank's benchmark rate at 2.25% is 'at about the right level' to support a period of modest growth while keeping inflation near target - Bank of Canada
GDP slide hardens case for Bank of Canada to stay on hold - Canadian Mortgage professional
The recent enthusiasm for variable rate mortgages may wane in 2026, especially if borrowers start anticipating new rate increases - Desjardins
A surge in mergers is reshaping the mortgage industry - Canadian Mortgage Trends
In an uncertain world, mortgage rates have remained surprisingly stable - Financial Post
The average mortgage rate will double for those who bought in 2021 on a five-year term .... increasing payments by about 26% - Vancouver Sun
Close to half of homebuyers use a mortgage broker for their financing - Globe & Mail
Mortgage renewers take note: there's never been a better time to switch lenders - Financial Post
More than a million Canadian homeowners will need to renew their mortgages in 2026 - Globe & Mail
There is much speculation in the market that OSFI is considering moving away from the mortgage stress test in favour of a loan-to-income test. We expect an update from OSFI on Jan 29.
Inflation in Canada remained unchanged at 2.2% in November. Data for December will announced on Jan 19.

Housing Market

The MLS Home Price Index (HPI) dropped 0.3% month-over-month in December 2025. The actual (not seasonally adjusted) national average sale price was only down 0.1% year-over-year.

A graph showing the residential average price in canada

Housing Sales declined 2.7% month-over-month in December 2025. Actual (not seasonally adjusted) sales were down 4.5% versus the prior year, December 2024.

A graph showing residential sales activity in canada

Housing Market Headlines

New listing activity was down 2% in December month-over-month, marking the fourth straight drop - CREA
Nationally, there were 4.5 months of housing inventory for sale at the end of December 2025, below the long-term average of 5 months - CREA
There doesn’t appear to have been much rhyme or reason to the month - over-month decline in home sales in December, which was simply the result of coincident but seemingly unrelated slowdowns in Vancouver, Calgary, Edmonton, and Montreal - CREA
We continue to expect sales to move higher again as we get closer to the spring, rejoining the upward trend that was observed throughout the spring, summer, and early fall of last year. - CREA
Economists expect a gradual housing recovery in 2026 as lower interest rates support demand - Canadian Mortgage Trends
Motivated buyers signal renewed housing market confidence heading into 2026 - RE/MAX
Solid market fundamentals, including lower interest rates, increased supply, and reduced competition, have created a more favorable environment for consumers - Royal LePage
Canadian homebuyers are playing a waiting game in a showdown with sellers, whose ranks have swelled in the past couple of years in parts of the country - RBC
With the central bank signaling it's done this cycle, it could be the hint some buyers were waiting for to make a move - RBC
Lower immigration will be a bit of a dampener on consumer spending and, of course, the housing markets and rental markets for a little while - BMO
Vancouver area saw least home sales in more than two decades in 2025 - GVR
2025 Fraser Valley real estate market slowest in over 2 decades - FVREB
BC home sales and prices both down about 6% last month, amid lower mainland slump - BCREA
Calgary housing market closed out 2025 with 14% fewer home sales in December - CREB
Edmonton's housing affordability edge could slip in 2026 - Conference Board of Canada
Winnipeg real estate sales 'soldiered on', armed with affordability - WRREB
Toronto housing market ended year with declines in prices and deals in Dec - TRREB
New listings in the GTA jumped 5.5% in December from the previous month - TRREB
Ottawa sees increase in housing sales in 2025 - CTV News
While homes sales have been on the wane in Nova Scotia in recent months, prices are proving resilient - Mpamag.com
Sales in Canadian housing market, including the GTA, saw drop not seen in decades - Toronto Sun
Average asking rents across Canada declined in Dec for the fifteenth consecutive month - Rentals.ca and Urbanation
Housing starts up 5.6% in 2025, versus 2024 - CMHC

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About The Author

Don Scott

Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.

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Mortgage Rate Forecast For 2026

By George Holicka • January 27, 2026

What are Canadian mortgage rates going to do in 2026? We expect mortgage rates to remain fairly stable through 2026. We think that the Bank of Canada will hold rates steady for much of the year, though some analysts are calling for hikes in the latter half of the year. Bond yields are also expected to remain stable, meaning that fixed mortgage rate should not move much. Predictions are difficult and the markets are sending mixed signals right now. Read on to find out what this might all mean? 2026 Mortgage Rate Prediction Mortgage rates should remain within a close range near current rates for most of 2026. Variable mortgage rates will follow the Bank of Canada rates, which are expected to remain flat for the first half of the year. Bond yields could fluctuate with economic news and fixed mortgage rates will follow but are likely to remain within the high-3% to mid-4% range, absent any significant economic surprises. Variable Mortgage Rates in 2026 We expect variable mortgage rates to remain mostly unchanged in 2026, potentially increasing by 0.25% to 0.50% if the Bank of Canada hikes toward year-end. The one huge caveat to this is that if the ongoing trade discussions with the US go poorly, weakening Canada’s economy, there may be an incentive for the Bank of Canada to make some cuts, as long as inflation remains under control. We do not hope for this poor economic news so prefer to not predict it to be likely. Variable mortgage rates are now below fixed mortgage rates and should remain there for the time being. We anticipate five-year variable mortgage rates for the best borrowers to range from 3.4% to 4% throughout the year, depending on any policy shifts. Fixed Mortgage Rates in 2026 We do not expect much change in fixed mortgage rates in 2026, but there is a risk that fixed rates could increase. Bond yields have already priced in limited Bank of Canada cuts and have been stable lately. The recent stability in the US 10-year Treasury yield around 4.2% suggests the bond market is cautious about further cuts. In Canada, bond yields are exactly where they were one year ago, with the five-year Canada bond at 2.88% in late January 2026. We must pay heed to those signals since fixed mortgage rates depend on the bond market. We anticipate five-year fixed mortgage rates to range between 3.7% and 4.3% for most of the year. We rely on market inputs to generate our own expectations for mortgage rates in 2026. Those key inputs include: The Bank of Canada has indicated the current overnight rate of 2.25% is "about right" to keep inflation near 2%, but stands ready to respond if needed; Economists are forecasting moderate Canadian economic growth, which may not require further stimulus; The US Federal Reserve is expected to cut rates gradually in 2026, potentially two to three times, but with uncertainty from trade policies; The US 10-year Treasury yield has hovered around 4.2% in early January 2026; Canadian 5-year bond yields are around 2.88% in late January 2026, flat to a year ago and showing no signs of a downward trend; and Excessive government borrowing puts pressure on bond yields to rise to entice investors to buy the large volume of government debt There are many risks that are not priced in yet that could materialize. Economic weakness or tariff impacts could prompt more rate cuts and lower bond yields. The trade agreement between Canada, Mexico and the US expires this year and needs to be renegotiated. Economic strength or resurgent inflation could lead to hikes and higher rates. There are also political and geopolitical risks that are making headlines that are not in our area of expertise. They are difficult to predict but could significantly impact our interest rate markets in 2026, a year currently marked by uncertainty. What Happened to Mortgage Rates in 2025? In 2025, Canadian fixed mortgage rates remained relatively stable, declining by a modest 0.20% through the year. Canadian variable-mortgage rates declined by 1.0%, in lockstep with the Bank of Canada reducing their target rate by the same amount in 2025. The Canadian market entered 2025 with expectations for gradual Bank of Canada cuts, which materialized with reductions totaling 1.00% from January through October. The first cuts came in January and March (0.25% each), followed by holds through summer, then additional 0.25% cuts in September and October. The end result was a reduction in the overnight rate to 2.25% where it remains as we embark on a new year in 2026. The Bank of Canada rate cuts in 2025 had the expected direct impact on variable mortgage rates, which dropped by the same amount. Fixed rates are ‘forward-looking’, so they moved in anticipation but stabilized as cuts slowed. As the chart shows, fixed mortgage rates have levelled off over the past year.