Canadian Housing Market Faces Extended Slump as Borrowing Costs Climb, BMO Says

07:31 AM EDT, 10/29/2026 (MT Newswires) -- Canada's housing market is expected to remain weak into 2027, with higher borrowing costs further dampening recovery prospects, according to BMO Capital Markets in a note on Wednesday. The Bank of Canada's rate hike on Wednesday and potential further increases will drive up variable mortgage rates, further dampening homebuyer demand, wrote BMO in the note. Over half of Canadian borrowers hold variable-rate mortgages, which have generally ranged from 3.5% to 3.75%. By spring 2027, mortgage rates could top 4% across the board, well above the roughly 3% level needed to stimulate housing market activity, said the bank. As a consequence, the housing market is likely to remain subdued, added BMO.