Mortgages and Market Insights: What to Watch Next in a Shifting Market

Over the past couple of months, the market has been in a period of transition. Rates moved up quickly when the oil crisis began, have since settled into a narrower range, but there’s still an underlying question:

Are we stabilizing or setting up for another shift?

A market that’s moving… quietly

On the real estate side, things are best described as steady but not strong. Activity so far this year is tracking similarly to 2025, which was one of the slowest years on record.

And yet, something important is happening beneath the surface:

• Buyers are still active

• Deals are getting done just more selectively

• Inventory remains high, creating negotiating opportunities

We are also starting to see early signs of pressure building in certain areas:

• Foreclosures are gradually increasing

• Unsold developer inventory is rising

These conditions don’t always feel great at the moment, but they are often where opportunities begin to emerge.

If prices continue to soften while rates hold relatively steady, we could start moving closer to pre-COVID affordability levels and that’s typically when demand returns more meaningfully.

Is it the perfect market? No.

But is it a market where good deals can be found? Yes, if you are looking carefully.

Bank of Canada: steady, but watching closely

The Bank of Canada recently held its policy rate at 2.25%, right at the lower end of what’s considered a “neutral” range.

Inflation is currently sitting around 2%–2.4%, but recent increases in energy prices driven by the conflict in Iran are expected to push inflation closer to 3% in the near term before easing again.

At the same time:

• Economic growth remains modest

• The labour market is soft

• Housing activity is still under pressure

• Global uncertainty remains elevated

The Bank’s message is clear: They are balancing slowing growth with rising inflation risks and are prepared to respond as needed.

Why oil is driving the conversation

The ongoing conflict in the Middle East continues to impact global energy markets. Oil prices have surged again, recently pushing above $100 per barrel, with supply disruptions tied to the Strait of Hormuz playing a major role.

This matters because:

• Higher oil prices → higher inflation

• Higher inflation → upward pressure on interest rates

• Rising rates → higher borrowing costs

Even if the conflict were resolved quickly, the ripple effects on inflation and rates don’t disappear overnight.

Rate outlook: what we are seeing now

Variable/adjustable rates:

The outlook remains relatively stable for now:

• Short term: No expected movement

• Medium term: Likely flat through 2026

• Long term: Gradual increases expected

Markets have reduced expectations for rate cuts significantly, with the possibility of future increases now being priced in over the next couple of years.

Fixed rates:

Fixed rates remain sensitive to global events:

• Bond yields moved higher, then stabilized

• There’s roughly a 50% chance of another upward move in the near term

• Longer-term trend still points to gradual increases (~0.20%+ per year)

At current levels, fixed rates are near the lower end of their recent range, though not necessarily the lowest we’ll ever see.

Fixed or variable/adjustable rate?

With recent shifts, the 5-year fixed is becoming more attractive again, especially for those who value stability.

That said:

• Variable/adjustable rates are still often below 4%

• They can offer short-term payment relief

• And they provide flexibility, depending on your situation

A simple rule of thumb: If your variable/adjustable rate is about 0.70%–0.75% lower than a fixed option, it may make sense to stay variable. Otherwise, it’s worth reviewing your options.

What we are seeing in the rental and investor market:

Rental markets are also adjusting:

• Rents are declining in many urban centers

• Vacancy rates are increasing

• More purpose-built rentals are coming online

For investors, this creates short-term pressure. For tenants and future buyers, it creates more flexibility and choice.

What does this mean to you?

In a market like this, the biggest advantage isn’t timing it’s being prepared.

It may be worth reviewing your strategy if you:

• Have a renewal coming up in the next 1–3 years

• Are holding a variable rate and unsure what to do next

• Are considering buying and wanting to understand your options

• Want to explore whether your current mortgage could be improved

We are also seeing situations where early refinancing or rate holds can help protect against future increases, especially while rates are still relatively stable.

A practical next step:

If you would like clarity on your situation, I am happy to run a quick, no-obligation review.

We will walk through your options and see what makes the most sense, no pressure, just clarity.

Where this leaves you:

Markets rarely send perfect signals. They shift gradually and then more noticeably.

Right now, we are in a period where:

• Rates have stabilized but could move

• Prices have adjusted but haven’t fully reset

• Opportunities are emerging but require attention

It’s not about predicting the next move perfectly. It’s about being ready when it happens.