Mortgage and Market Insights

Alisa Aragon-Lloyd
Mar 18
3 min read

Just like this time last year, things are starting to pick up again. The question is, will momentum build from here, or will it stall as it did in 2025?

Global events, local impact

Over the past few weeks, global markets have been shaken by renewed conflict in the Middle East. With tensions escalating and key supply routes like the Strait of Hormuz under pressure where roughly 20% of the world’s oil flows through energy prices have surged and uncertainty has returned to the forefront.

Why does this matter here at home?

Because rising oil prices feed directly into inflation. And inflation, in turn, influences interest rates.

Before this conflict, inflation in Canada had been easing nicely. Now, the path forward depends heavily on how long this disruption lasts and how quickly global supply chains stabilize.

Bank of Canada: holding steady – for now

The Bank of Canada has kept its policy rate unchanged at 2.25%, a level considered “neutral” meaning it’s neither stimulating nor slowing the economy.

This decision reflects a balancing act:

What’s supporting the economy:

Domestic demand has remained relatively stable
Inflation has eased to 1.8%, close to the 2% target
Government spending continues to provide support

What’s creating pressure:

GDP contracted 0.6% in late 2025
The labour market has softened, with unemployment rising to 6.7%
Export activity remains weak
Global uncertainty, especially from energy markets, has increased

The Bank’s message is clear: Growth risks are rising, but so are inflation risks.

For now, the most prudent move is to pause and watch.

The bigger picture

Globally, the economy was on track for steady growth of around 3%, but recent events have introduced new volatility.

Canada continues to adjust to trade pressures and tariffs, while also expanding relationships beyond the U.S. That said, no market fully replaces the efficiency and scale of U.S. trade especially for key industries like steel, aluminum, and manufacturing.

The takeaway?

This is not a collapse; it’s a transition period. And transitions are where strategy matters most.

Housing market: quietly shifting

While headlines may suggest a slow market, activity is starting to re-emerge.

Home prices are down roughly 18–20% from peak levels in 2022
Inventory remains elevated
Buyer interest is quietly increasing; early 2026 activity is up significantly compared to late 2025

There’s also meaningful pent-up demand, particularly among first-time buyers who have been waiting for both prices and rates to settle.

This creates an interesting window:

Less competition
More negotiating power
Motivated sellers
Opportunities that simply didn’t exist a few years ago

It may not be a “hot market”—but it may be a smart market.

Rate outlook: what we are seeing now

Variable/adjustable rates:

The outlook remains relatively stable in the short term:

Short term: Little expectation of cuts
Medium term: Likely flat through much of 2026
Long term: Gradual upward pressure

The recent oil shock has reduced the likelihood of near-term rate cuts, with markets now assigning less than a 25% chance of a decrease in the coming months.

Fixed rates:

Fixed rates continue to react quickly to global events. Current signals suggest we may be near the lower end of the range for fixed rates, particularly in the short term.

Fixed or variable/adjustable rate?

With markets shifting, the 5-year fixed is beginning to edge ahead again for those seeking stability especially if forecasts of higher rates over the next 12–24 months prove accurate.

That said:

Variable rates are still often below 4%
They may offer short-term payment relief
And they provide flexibility, depending on your situation

There’s no one-size-fits-all answer here only what fits your goals, timing, and comfort level.

A practical opportunity to consider:

With the recent volatility in rates, this may be a good time to:

Secure a rate hold, especially if you are planning ahead
Review your current mortgage, particularly if it was set at higher rates 2–3 years ago

In many cases, we are seeing that the cost to break a mortgage early can be offset by long-term savings allowing you to lock into a stronger position today rather than hoping for better conditions later.

What does this means to you?

Markets are rarely calm when opportunities appear.

Right now, we are seeing a mix of: