The first major monetary policy announcement of 2026 just dropped and it sets the tone for how the Canadian housing market will unfold this year. Today, we’re breaking down what the Bank of Canada (BoC) actually decided, why it signals a hold-for-now approach, and what that means for buyers, sellers, and investors as we move deeper into 2026.

Need more insights? Click Here

On January 28, 2026, the Bank of Canada announced it would maintain its policy rate at 2.25% unchanged from December 2025 and a hold after the rate was cut from 2.50% in late October 2025. The Bank also released its quarterly Monetary Policy Report alongside the decision.

Here are the key facts:

In simple terms: the BoC isn’t moving today and its language suggests it may stay right where it is for a while.

Central banks rarely do nothing lightly. The fact that the BoC chose to hold at 2.25 % instead of cutting or hiking reflects several key signals:

Officials believe inflation is trending closer to their 2 % goal, reducing pressure to hike.
There’s no urgency to cut either, because inflation isn’t falling too fast.

Trade tensions, especially ongoing U.S. policy uncertainty, have complicated the outlook. Officials explicitly highlighted this as a reason to stay cautious rather than pivot abruptly.

The BoC reiterated that economic growth is expected to be modest not roaring, not recession-level either. This makes large shifts unnecessary and potentially risky.

Bottom line: Stability over volatility.

Here’s how this rate hold and the likelihood of rates staying steady for much of the year translates to housing conditions:

Mortgage rates are closely connected to the BoC’s stance. A stable policy rate means no sudden jump in borrowing costs which helps buyers and homeowners plan.
However, because the rate wasn’t cut significantly, mortgage payments won’t suddenly become much cheaper either.

That stability helps budgeting but doesn’t magically solve affordability challenges.

The Greater Toronto Area (GTA) ended 2025 with softer prices and sales volume: bench­mark prices slipped around 5–6% and sales declined, while inventory remained elevated.

With rates stable, most forecasts including from CREA project slightly higher sales activity in 2026 (roughly +5% nationally), but only modest price growth.

So instead of big jumps, expect:

Because the BoC isn’t signalling a rush to hike or cut, buyers who were waiting “for the next rate move” may feel more comfortable re-entering especially in markets like suburban Ontario where affordability still exists relative to core Toronto prices.

The message from markets and economists right now is that the policy rate will likely remain at 2.25 % through much of 2026 barring shocks with many forecasts not expecting further cuts until late in the year (or not at all by year-end).

Here are practical takeaways for different players in the real-estate space:

The Bank of Canada’s January 28, 2026 decision to hold rates at 2.25 % isn’t just a pause it’s a signal of measured stability. We’re likely entering a period of steady policy where the Bank watches and waits, rather than reacts sharply.

For housing markets, that translates to predictability, slow improvement in activity, and modest price movement not dramatic shifts.

The RealEdge Team

Need more insights? Click Here

See you next week