With the Bank of Canada holding its policy rate at 2.25%, many market watchers expect steady borrowing costs to calm the housing market heading into 2026.
Still, industry forecasts point to only modest price growth and a “reset” year rather than a sharp rebound, even as major brokerages describe conditions as improving but fragile.
Joel Fox, chief operating officer of digital real estate platform Ownright, argued that the real drag on activity has less to do with borrowing costs and more to do with psychology.
In his view, confidence, clarity and emotional risk are now doing more to shape buyer behaviour than posted mortgage rates.
Recent internal Ownright survey data of 250 Ontario homebuyers indicated that 97% felt financially ready to buy, but nearly half reported that the process became confusing or stressful once they encountered the fine print.
“A rate hold confirms what we’ve been seeing for months: interest rates aren’t the barrier anymore. Prices have already come down from their peaks, but buyers remain cautious because they’re unsure about the long-term value of their purchase. People worry more about overpaying or losing equity than they do about an extra few dollars on monthly interest,” Fox said.
“Realtors and lenders are entering a new phase where the non-financial side of homebuying matters more than the price tag. Buyers want transparency, clear communication, realistic valuations, and guidance that helps them understand the risks, not just the costs. And with AI tools giving consumers more information than ever, the industry can’t rely on old assumptions about what buyers will accept,” he said.
Fox said that emotional risk has increasingly outweighed pure affordability concerns: buyers fear locking into properties that might lose value, even as many believe that current prices are below peak levels.
He said AI-driven valuations and richer data on neighbourhood trends have trained borrowers to scrutinize comps, price cuts and days-on-market far more closely than in the last cycle.
Meanwhile, BMO chief economist Doug Porter describes a 2026 rate hike as a “distant prospect,” while suggesting that a steady overnight rate could give buyers more certainty about future costs.
Royal LePage and REMAX Canada both project only moderate national price growth, with more balanced conditions rather than a renewed frenzy.
At the same time, some rate forecasts suggested that the Bank of Canada has moved to the lower end of its neutral range, reinforcing the sense that policymakers are now in “wait and see” territory.
Fox said the industry’s next challenge lies less in product design and more in communication. He pointed to situations where pre-approvals, conditional offers and closing costs diverge from buyers’ expectations, eroding trust even when payments remain manageable.
“Heading into 2026, trust is going to drive the recovery. Rates may be stable, but confidence isn’t, and until the industry rebuilds it, we shouldn’t expect major movement in the market,” Fox said.
CMP
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