Another Bank of Canada Rate Hold: Housing’s Status Quo Drags On

After the Bank of Canada announced its fifth consecutive rate hold on June 10, 2026, the overnight rate has sat untouched since before Halloween 2025.

A lot has happened since then. Canada slipped into a technical recession. Employment figures suffered an extended losing streak before rebounding in May. It was revealed that the World Cup will cost the country over $1 billion to host 13 matches. The war in Iran has disrupted oil markets and diminished the outlook for the global economy.

Even with higher gas prices, though, does it feel like anything’s really changed over the past nine months? The status quo is certainly in effect where the housing market’s concerned.

Rising fixed mortgage rates and the high cost of living have combined to drag home sales even lower than last year’s sad levels. There were 9,653 fewer home sales in the first four months of 2026 compared to the same period in 2025.

While the slowdown has left home buyers with plenty of homes to choose from in B.C., Ontario, and Alberta, financing options everywhere have whittled down to an uncomfortable choice.

Go variable or no home

For home buyers, the bright side of today’s unique strain of economic turmoil is that it’s tied the Bank of Canada’s hands.

Raise the overnight rate to tamp down inflation caused by the Iran war and the Bank risks throttling the economy. Lower the overnight rate to stimulate economic growth and the increased borrowing power could slam into high gas prices to create another painful period of inflation.

The Bank’s caution this year has been reasonable. It has also resulted in stable variable mortgage rates. (The overnight rate directly influences lenders’ variable rates.) Variables have been down around 3.4% for months.

Not so for fixed mortgage rates, which continue climbing as lenders respond to war-induced volatility in government bonds. While some mortgage brokerages are still offering three- and five-year fixed rates for around 4%, good luck finding a fixed rate below 4.6% at any Big Six lender.

The payment difference between 3.4% and 4.6% on a 25-year, $400,000 uninsured mortgage is about $260 a month. For home buyers struggling to make the numbers work, that spread could be a literal deal-breaker.

In scenarios where borrowers are priced out of fixed-rate stability, they’ll have to step away from the market or roll the dice on a variable — and hope that the Bank either holds the overnight rate until well into next year or delivers an unexpected cut or two.

If it truly is variable-or-bust for buyers, it’s hard to envision home sales generating much steam this year. Not everyone will be comfortable with a variable rate’s inherent risks. And buyers hoping for fixed rates to fall could be waiting a while.

War, oil and the fixed-rate squeeze

Back in February, you could find three- and five-year fixed mortgage rates for as low as 3.7% at some mortgage brokers. But once the war in Iran threatened the world’s oil supply, government bond yields spiked.

Lenders, as they are wont to do, raised their fixed mortgage rates in response. As the war dragged on and yields kept climbing, fixed rates have, too.

Yields have pulled back significantly at various points in the conflict, often when a peace deal seems within reach, but they haven’t remained stationary long enough to make a difference. In the past two weeks, major lenders like CIBC, RBC and National Bank have all increased their three- and five-year fixed rates.

For fixed mortgage rates to return to their pre-war levels, a lot has to go right, including:

In the best case scenario, experts estimate that it could take months for all of that to occur. And none of it can happen until the first item on that list gets checked off.

Until then, Canadians, our lenders and our beleaguered central bank are all stuck inside the status quo together.