Mortgage Rate Outlook: What Buyers and Homeowners Can Expect in 2025 and 2026

As a real estate agent here in beautiful Victoria, BC, I know that staying ahead of mortgage trends is just as important as knowing the local housing inventory. Whether you're buying your first condo downtown, upsizing in the suburbs, or exploring investment opportunities, understanding where mortgage rates are headed helps you plan with confidence. So here’s a quick, down-to-earth breakdown of where things are going.

Key Highlights:

• Canadian mortgage rates have held steady despite a turbulent bond market.

• Economic growth got a temporary boost from tariff-avoidance spending in early 2025—but signs of slowing are now showing.

• The Bank of Canada is expected to resume rate cuts as early as July 2025.

What the Forecast Tells Us

Let’s look at the numbers for 2025 and 2026:

• Variable rates are expected to gradually drop from 4.55% in Q1 2025 to 4.0% by the end of 2026.

• Five-year fixed rates (uninsured) are forecasted to remain relatively stable, hovering around 4.35% to 4.5%.

• The qualifying rate—the rate used to stress-test mortgage borrowers—is expected to decline modestly to 6.35% by 2026.

This forecast, provided by BCREA Economics and RateSpy, suggests that mortgage costs will ease slightly, making homeownership a little more accessible. After a few years of rate hikes, that’s welcome news for many buyers.

What This Means for You as a Buyer or Homeowner

If you're on the fence about buying, a potential drop in rates could mean improved affordability and better monthly payments later this year and into 2026. But remember: timing the market perfectly is nearly impossible. If you find a home you love that fits your budget now, it may still be the right time to make a move.

If you're renewing a mortgage in the next year or two, you may want to explore shorter-term fixed options or variable rates that could benefit from future Bank of Canada cuts. Speak with a mortgage broker to review scenarios that match your goals.

And if you're a homeowner considering refinancing, slightly lower rates may open up new options for debt consolidation or accessing equity for renovations.

Looking Ahead

While bond markets and global factors will always add some unpredictability, the overall trend points to gradual rate relief—not a sharp decline. The BoC appears cautious, balancing inflation and economic momentum, but July 2025 is shaping up to be the beginning of a potential easing cycle.

Need Real Estate Guidance in Victoria?

Whether you're just starting to explore the market or actively house hunting, I’m here to help. With experience in both real estate and financial analysis, I can walk you through your options with clarity—no pressure, just real conversations.

Let’s connect and build a game plan that fits your future.

—
Florencio Mende Jr.
REALTOR® | Victoria, BC
📞 250-882-1986
📧 florenciomendejr@gmail.com
📱 Follow me on Instagram: florenciomendejr_realtor