2026 Mortgage Rate Forecast: What Ontario Homeowners Should Expect Next

📊 Introduction

2025 brought long-awaited relief to Canadian borrowers — but the big question now is, what happens in 2026?
Will rates finally stabilize, or are more surprises ahead for Ontario homeowners?

In this post, we’ll break down expert forecasts, the latest Bank of Canada trends, and how to position yourself for success before the next cycle begins.

1️⃣ 2025 Recap – The Turning Point Year

After two years of rate hikes, 2025 became the year of transition.
The Bank of Canada cut its policy rate to 2.25%, easing pressure on households. Fixed mortgage rates followed, averaging around 3.59%–3.89% by year-end.

This shift created breathing room for buyers, renewals, and refinances — but the real story is what comes next.

2️⃣ 2026 Forecast – Moderate Relief, Not a Full Reset

According to projections from RBC Economics and TD Bank:

• The overnight rate is expected to remain between 2.00–2.25% through mid-2026.
• Five-year fixed rates could hover near 3.5–3.8%.
• Variable rates may settle around 3.0–3.2% if inflation stays contained.

💬 Translation: The worst is behind us — but don’t expect pre-pandemic lows again anytime soon.

3️⃣ What This Means for Ontario Buyers

For first-time homebuyers, the next 6–12 months could offer a “sweet spot” — moderate prices and friendlier lending conditions before demand rebounds.

Key takeaways:

• Affordability improves slightly as rates stabilize.
• Sellers gain confidence by late 2026.
• Fixed vs variable decisions become more balanced again.

If you’re eyeing a purchase, early 2026 could be your window to lock in before another wave of market competition begins.

4️⃣ Fixed vs Variable in 2026: Which Wins?

TypeAvg. 2026 RateBest ForFixed (3–5 years)~3.6%Predictable budgets, familiesVariable (Prime - 0.75%)~3.0%Flexible buyers & investors

Expert Tip: Shorter fixed terms (2–3 years) might offer the best balance — you’ll benefit from lower rates now and flexibility later if the market shifts again.

5️⃣ The Ontario Market Outlook

Ontario’s housing market should remain steady with modest price growth:

• +2–4% average appreciation expected across most regions.
• GTA and Durham Region remain balanced; smaller markets like Barrie, London, and Windsor show stronger investor activity.
• Rental demand continues to rise, keeping ADU and duplex strategies strong.

6️⃣ How Homeowners Can Prepare Now

✅ Review your mortgage term — if renewal is due in 2026, start comparing rates 120 days early.
✅ Consider early refinancing if you have high-interest debt.
✅ Build a cushion in your budget for small payment fluctuations.

And if you’re a buyer, work with a broker who can model both fixed and variable projections to find the lowest lifetime cost — not just the lowest headline rate.

7️⃣ Final Word

2026 is shaping up to be the year of stability and opportunity.
While we may not see record-low rates, the market is finally predictable again — and that’s what smart homeowners and investors need to plan with confidence.

📞 Ready to plan your 2026 mortgage strategy?
Call (437) 961-0004 or Apply Now.

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