This Week in Canadian Mortgages: Rates Hold Steady, Housing Starts Rebound, and Fraser Valley Cools

Welcome to your weekly roundup of Canadian mortgage and housing news. This past week brought a mix of steady policy, a rebound in housing construction, and continued cooling in the Fraser Valley market.

Bank of Canada Holds Rates, Fixed Rates Tick Up

The Bank of Canada held its target for the overnight rate steady at 2.25% on March 18, 2026, marking the second consecutive rate hold for 2026 and offering stability for variable-rate mortgage holders. The next announcement is scheduled for April 29, 2026.

While the policy rate held, Government of Canada bond yields rose significantly. The five-year GoC bond yield surged by 0.30% last week, building on an increase of over 0.50% in the past three weeks. This pressure pushed many lenders to increase their fixed mortgage rates. As of March 23, 2026, variable rates hovered around 3.4%, with fixed rates around 3.7%, though major banks are reporting 5-year fixed rates closer to 6.09%.

The BoC acknowledged that the Canadian economy is “dealing with a lot,” citing slower growth, a weak housing market, and a soft labor market. Inflation remains within the 1-3% target range. According to the Bank of Canada, it will continue to assess economic conditions carefully before any future moves.

Housing Starts See Modest February Rebound

After a dip in January, Canadian housing starts rebounded modestly in February 2026. CMHC reported the seasonally adjusted annual rate of housing starts increased by 4.5% to 250,900 units in February, up from 240,148 units the previous month.

The increase was driven primarily by multi-family urban starts, which rose 8% month-over-month. Single-detached starts declined by 8%. Quebec and the Prairies led regional gains, while British Columbia saw a notable decline. Despite the rebound, CMHC anticipates that “heightened business uncertainty and construction costs” will continue to weigh on starts in the near term.

Federal and Provincial Housing Policy Updates

Federally, Housing Minister Gregor Robertson is pushing to finalize deals with provinces to reduce municipal development charges, part of a $12-billion fund from the 2025 federal budget. The federal government also introduced the “Build Canada Homes Act,” establishing a Crown corporation capitalized with $13 billion to build affordable housing at scale.

However, a Parliamentary Budget Officer report projected that federal housing spending would decline significantly over the next four years, with the initiative constructing only an estimated 26,000 new homes. CBC News details concerns about whether ambitious housing targets can be met.

At the provincial level, Langford, BC is seeking a pause on provincial housing targets after the suspension of provincial funds for affordable and Indigenous housing projects in the latest budget.

Fraser Valley Market Shows Continued Cooling

The Fraser Valley real estate market remains firmly a buyer’s market. For the week ending March 13, 2026, house sales were approximately 10% below last year’s figures. Elevated inventory levels, primarily due to deteriorating sales rather than increased new listings, are driving this trend. Months of inventory in the Fraser Valley is high, suggesting it could take around 10 months to sell every detached home at the current sales rate.

February 2026 showed early signs of a spring thaw, with sales increasing over January, but still remaining 38% below the ten-year seasonal average. New listings declined 9% in February, while overall inventory remained robust at 51% above the 10-year seasonal average. The composite benchmark price for a typical Fraser Valley home dipped 0.2% in February to $895,100. The Fraser Valley Real Estate Board provides monthly breakdowns of these figures.

What This Means For You

For variable-rate mortgage holders, the Bank of Canada’s rate hold provides a moment of stability. Those with fixed-rate mortgages, or looking to lock in, should be aware that rising GoC bond yields are pushing rates higher across the board. Locking in sooner rather than later may be prudent if you’re up for renewal in the next 6-12 months.

The modest housing start rebound signals some supply recovery ahead, but construction headwinds mean this will take time to translate into meaningful affordability relief. For Fraser Valley buyers, current market conditions represent genuine opportunity, with more listings, softer prices, and less competition than the past several years. Sellers should price to current market conditions, not 2022 levels.

As always, connect with a mortgage professional to understand how these broader trends apply to your specific situation and timeline.