Bank of Canada Holds Rate Steady at 2.25% as Uncertainty Lingers
The Bank of Canada maintained its policy rate at 2.25% at its January 28, 2026 announcement, marking the second consecutive hold after a series of aggressive cuts throughout 2025. The decision aligns with expectations from most economists, who forecast rates to remain stable through much of 2026.
“Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today,” the Bank stated in its press release. Markets are now pricing in a high probability of no change at the next announcement scheduled for March 18, 2026.
For mortgage holders, this means variable-rate borrowers should not expect immediate relief. However, the silver lining is that stability allows for better planning. If you are renewing this spring, you can budget with confidence that rates are unlikely to spike suddenly.
CMHC Predicts “Subdued” Housing Market Through 2026
The Canada Mortgage and Housing Corporation released its 2026 Housing Market Outlook in February, and the forecast is cautious. National home sales are projected to reach 489,000 units, up modestly from 470,000 in 2025, while average prices are expected to rise slightly to around $698,000.
However, the CMHC warns that demand will remain below historical averages. “Elevated price-to-income ratios, high carrying costs and lingering job uncertainty will keep many buyers on the sidelines,” the report states. Read the full CMHC outlook.
Ontario faces particular headwinds, with housing starts projected to fall to near two-decade lows driven by weak condominium pre-construction sales. The rental market is expected to see higher vacancy rates and slower rent increases nationwide, which could give prospective buyers more time to save before entering the market.
Fraser Valley Home Prices Fall to Pandemic-Era Levels
For local buyers in the Fraser Valley, the market continues to favor those with financing in place. The benchmark price for a typical home fell to $897,200 in January, dropping below $900,000 for the first time since spring 2021. This marks the tenth consecutive month of price declines.
According to the Fraser Valley Real Estate Board, January sales totaled just 619 units, a 33% decrease from December and 24% below January 2025 levels. New listings surged 128% to 3,078, giving buyers ample selection.
“January opened the year with negligible momentum,” said FVREB chair Tore Jacobsen. “Prices continued to weaken while at the same time selection remains high.” The average time to sell now sits at 55 days for detached homes, 53 days for condos, and 50 days for townhomes.
Canada’s Affordability Crisis Spreads Beyond Toronto and Vancouver
CMHC’s latest research reveals that Canada’s housing affordability crisis is no longer confined to Toronto and Vancouver. A new affordability index shows significant erosion in Ottawa, Montreal, and Halifax from 2020 to 2023. Of seven major cities studied, only Edmonton has maintained affordability levels.
The index tracks metrics including the share of median income required for homeownership costs, available inventory within median income budgets, and discretionary income available for housing. According to the Financial Post, homeownership affordability nationally has fallen to its lowest point since the 1990s.
Desjardins economist Kari Norman estimates that over 631,000 “suppressed households” exist in Canada, people who would form their own households if housing were affordable. This number has likely grown with recent population increases.
GST Rebate for First-Time Buyers Clears Senate
Some relief may be on the way for first-time buyers. The federal government’s proposed GST rebate cleared the Senate in late February 2026. The rebate would eliminate the 5% federal GST on qualifying new homes priced up to $1 million, providing maximum savings of $50,000.
The enhanced Home Buyers’ Plan also allows first-time buyers to withdraw up to $60,000 from their RRSPs tax-free for a home purchase, up from the previous $35,000 limit. Couples can access up to $120,000 combined. Additionally, 30-year amortizations are now available for eligible new and resale homes.
To qualify for the GST rebate, purchase agreements must be entered into after March 19, 2025. Buyers should consult with their mortgage broker to understand how these programs could improve their purchasing power.
Mortgage Renewal Wave: 33% of Borrowers Face Payment Increases
The so-called “mortgage renewal wall” continues to dominate industry discussions. By the end of 2026, approximately 33% of Canadian mortgage holders are expected to face higher monthly payments. According to Nesto.ca, those with fixed-rate mortgages renewing this year could see payment increases averaging around 20%.
The experience varies significantly for variable-rate borrowers. Those with adjustable-rate mortgages have largely absorbed the impact of past rate hikes and may see payment relief if rates decline. However, variable-rate mortgage holders who experienced negative amortization could face payment increases of 40% or more at renewal.
Industry experts increasingly recommend three-year fixed terms as a middle ground, providing rate stability while preserving flexibility to refinance when today’s uncertainty subsides.
What This Means For You
The dominant theme across all these developments is stability. The Bank of Canada appears committed to holding rates steady, the housing market is finding a subdued equilibrium, and economic uncertainty from trade tensions is keeping both buyers and sellers cautious.
For buyers in the Fraser Valley: This remains one of the better opportunities in years to purchase without facing bidding wars. With benchmark prices back to 2021 levels and inventory high, qualified buyers have negotiating power. The key is securing financing and being prepared to act when the right property appears.
For homeowners renewing in 2026: Start planning now. If your renewal is coming up, speak with a mortgage broker three to four months in advance to explore your options. While rate relief may be limited, shopping among lenders and considering different term lengths can help manage payment shocks.
For first-time buyers: Take advantage of new federal programs like the GST rebate and enhanced Home Buyers’ Plan. These tools, combined with softer prices in many markets, could make 2026 your year to enter the market.
The path forward remains uncertain, with GDP forecasts weaker than hoped and trade tensions creating volatility. But for those with stable employment and solid financial footing, opportunities exist in this quieter market. The key is cutting through the noise and focusing on what you can control: your credit score, down payment savings, and finding the right mortgage structure for your situation.
Questions about how these trends affect your mortgage strategy? Contact the Browne Mortgage team for personalized advice.
