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Has Your Income Changed? What to Check Before Refinancing Your Mortgage
Your hours have been reduced. You have started a new job. Or your household is managing on one income while you work out what comes next. If you own a home, refinancing may seem like a practical way to create some breathing room.
It can be worth exploring, but home equity alone does not establish that you qualify. A lender also needs to assess whether you can repay the mortgage based on your current financial situation.
Statistics Canada reported an employment decline in August 2026. For homeowners reviewing their finances this fall, that is a useful reminder to look beyond mortgage-rate headlines and consider the income actually available to support their payments.
You may be able to refinance after an income change, but approval depends on the income a lender accepts, your debts, credit, property and requested loan. Before applying, establish what has changed and what you need the mortgage to accomplish.
Start by separating refinancing from renewal
Renewing means arranging another term for your remaining mortgage balance when the current term ends. Refinancing changes your borrowing arrangement, often to access equity, consolidate debts or adjust the repayment period.
These are different decisions. If your priority is keeping your existing mortgage manageable, ask about your renewal options before assuming you need additional borrowing.
Moving to a different lender requires approval from that lender. Start reviewing options a few months before your term ends, so you have time to compare conditions and costs. Your current lender's renewal offer also deserves a careful review.
Does the renewal stress-test exemption help?
OSFI no longer requires its prescribed minimum qualifying rate for an uninsured straight switch between federally regulated lenders at renewal, provided the loan amount and remaining amortization do not increase.
That exemption does not remove the new lender's responsibility to assess the application. It also does not extend to a cash-out refinance simply because the transaction takes place on your renewal date. Ask your broker to confirm how your proposed transaction is classified.
Check which income the lender can use
A lender needs a reliable picture of your earnings. OSFI's underwriting guidance calls for verification of employment status and income history, with attention to income stability.
This matters when your income includes overtime, commissions or bonuses. A particularly strong pay period may not represent the amount a lender will accept for qualification.
For self-employed applicants, tax records and relevant business documents help establish the income available to support the mortgage. Business revenue and personal qualifying income are not interchangeable.
Explain the change at the beginning of the conversation. If your previous application showed full-time employment and your hours have since dropped, the new application should reflect that. Ask which documents are needed to support your current position rather than relying on an older approval.
Prepare the paperwork before comparing offers
Your broker or lender will provide a checklist for your circumstances. Useful documents to gather for the initial review include:
Recent pay statements and employment details, including your pay rate and time with the employer.
Tax returns and notices of assessment, particularly when you are self-employed.
Your current mortgage statement and renewal date.
Statements showing credit cards, loans and other financial obligations.
A clear summary of the amount you want to borrow and its intended use.
Ask for the document list before spending time collecting records that may not be needed. A focused first review is more useful than sending a large folder without explaining the income change.
Review qualification and your everyday budget separately
Lenders consider income, housing costs, debt payments and credit when assessing affordability. If income falls while those commitments stay the same, there is less room to support borrowing.
For a refinance with a federally regulated lender, the mortgage stress test generally uses the higher of your contract rate plus two percentage points or 5.25%. This qualifying rate tests your ability to make payments; it is not necessarily the rate you pay.
Your own budget needs another check. Use take-home income and actual spending, including groceries, transportation, childcare, insurance and home maintenance. Leave room for irregular bills instead of treating every unallocated dollar as money available for the mortgage.
Before requesting an offer, write down the monthly payment you could comfortably manage today. Then ask for options around that figure. Do not build the plan around overtime returning, a raise arriving or a new contract being signed.
If you are also considering selling and buying another home, revisit that purchase budget using your updated income. A previous mortgage estimate should not be the basis for a new commitment after your circumstances change.
Find out how much equity is actually available
Home equity is your property's value minus the borrowing secured against it. The amount available for refinancing is smaller than your total equity because lenders limit how much they will lend against the property.
For a typical refinance, total borrowing secured against the home can generally reach up to 80% of its appraised value, subject to qualification and lender requirements. Existing secured debt reduces the amount that may be available.
Ask for an estimate of the net funds you would receive after existing balances and transaction costs are paid. That is the useful number when deciding whether the refinance will meet your needs.
A home's value provides security for the loan. It does not replace the need for a workable repayment plan.
Understand what an income change means for your rate
The Bank of Canada influences borrowing costs, but it does not set individual mortgage rates. Lenders also consider funding costs, credit risk and the characteristics of the mortgage.
A change in your earnings does not, by itself, reset an existing fixed mortgage rate during its term. When you apply for new financing, however, your financial circumstances can affect which lenders and products are available.
Variable mortgage rates are typically linked to a lender's prime rate. Fixed mortgage pricing also reflects longer-term funding conditions. Neither provides a reason to assume your next offer will match an advertised rate.
Request a comparison based on the same loan amount and repayment period. Ask what conditions apply to each quote and what remains outstanding before approval. Choose using the actual offer, rather than a prediction about the next rate announcement.
Check the cost of creating a lower payment
Refinancing before your term ends may involve a prepayment penalty. Appraisal, legal, discharge and registration costs may also apply. Ask for an itemized estimate before committing.
A lower monthly payment can also come from extending the amortization, which spreads repayment over more years. That can increase total interest costs. Ask to see both the payment and the expected balance at the end of the proposed term.
When consolidating debts, compare the full repayment plan. Moving credit-card borrowing into a mortgage secures that debt against your home. A smaller monthly bill does not mean the debt has disappeared.
Be direct about the problem you are trying to solve. Is this a one-time expense, or does normal monthly spending exceed your current income? If it is an ongoing shortfall, ask how the plan addresses that gap after the refinance funds are used.
If payments are becoming difficult, contact your lender early
If you are worried about making your next payment, contact your lender now. You do not need to finish researching refinancing before explaining that your circumstances have changed.
The Financial Consumer Agency of Canada expects federally regulated financial institutions to support eligible borrowers experiencing exceptional financial difficulties. Depending on the circumstances, mortgage relief may include changes to the repayment arrangement.
Relief is assessed individually. Ask what the arrangement would cost, how long it would last and how regular payments would resume. Do not stop or reduce payments without an agreed arrangement.
Make your next mortgage decision with current numbers
Before proceeding, ask your mortgage professional to explain the income accepted for qualification, the net funds available, all costs and the proposed monthly payment.
Also ask what happens if refinancing is not suitable. A useful review should help you compare the available choices, including discussing your existing mortgage with your lender.
Has your household income changed? Arrange a mortgage review before committing to new borrowing. Bring your mortgage statement, current income records and debt balances so the conversation starts with your situation as it stands today.
Frequently asked questions
Can I refinance my mortgage if my income has dropped?
Possibly. A lender must assess whether your current qualifying income supports the proposed mortgage and other obligations. Your equity, credit and requested loan also matter. An income drop can reduce your borrowing options, even if you have substantial equity.
Can I refinance after starting a new job?
A new job does not establish approval or refusal on its own. The lender reviews your employment, income history and supporting documents under its policies. Tell your broker when you started, how you are paid and whether any employment conditions remain.
Will I need to prove my income when switching lenders at renewal?
Expect the new lender to assess your income and finances. Eligible uninsured straight switches between federally regulated lenders are exempt from OSFI's prescribed stress-test rate when the loan amount and amortization do not increase. That exemption does not guarantee approval.
Does having enough home equity guarantee refinancing approval?
No. Equity is only one part of the assessment. For a typical refinance, lenders also review repayment capacity, debts, credit and the property. Having room below the usual 80% borrowing limit does not mean you can automatically borrow that amount.
What should I do if reduced income makes my mortgage unaffordable?
Contact your lender before missing a payment and explain the income change. Ask about mortgage relief and the costs of any proposed arrangement. A mortgage professional can also review whether refinancing is feasible, but additional borrowing should have a sustainable repayment plan.
Sept 2-2026 - Bank of Canada maintains the policy rate at 2.25%
The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
The continuing conflict in the Middle East is keeping energy prices high. As well, new US tariffs and Canadian counter-measures have been announced following the breakdown of trade talks between Canada and the United States. Both situations remain fluid.
In the United States, economic growth continues to be solid, driven by consumer spending and AI-related investment. Growth in the euro area was stronger than expected in the second quarter, while China's economy slowed. Overall, the global economy has shown resilience in the face of geopolitical headwinds, with growth broadly consistent with the July Monetary Policy Report (MPR) projection. With still-high oil prices and elevated margins for refined energy products, inflation in most countries remains high.
Financial conditions have tightened since July. Long-term bond yields have moved up globally, including in Canada. The Canadian dollar has appreciated slightly on US-dollar weakness.
As expected, Canadian economic activity strengthened in the second quarter, with GDP up by 3.3%, following very weak growth in the first quarter. While some of the recent strength reflected temporary factors, the pick-up in activity was broad-based. Consumption showed solid gains. Following several weak quarters, there was some rebound in housing activity. Exports and business investment were up sharply. Labour market conditions have improved in recent months, with the unemployment rate edging down to 6.4% in July. Still, demand for labour remains subdued and indicators point to continued excess supply in the economy.
Overall, recent data reaffirm Governing Council's view of a broadening recovery in Canada's economy. However, uncertainty is high and new US tariffs and threats of further action pose risks to the sustainability of the recovery.
CPI inflation has been hovering around 3% in recent months, mainly because of persistently higher gasoline prices. So far, there has been little evidence of higher energy prices spreading to other components of inflation: excluding gasoline, inflation was 2.2% and measures of core inflation remained close to 2% in July. However, with the Middle East conflict still ongoing and little progress reopening the Strait of Hormuz, upside risks to the Bank's inflation forecast have increased. The longer that high oil prices and elevated refinery margins persist, the greater the risk of spillover to the prices of other goods and services. New US tariffs and Canadian counter-tariffs will also raise costs for some businesses and could feed into consumer prices over time.
With the economy and inflation evolving broadly as forecast in the July MPR, Governing Council agreed to leave the policy rate unchanged. However, the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain. Governing Council will assess the sustainability of the economic rebound and the outlook for inflation, and is prepared to adjust monetary policy as needed. The Bank remains committed to maintaining Canadians' confidence in price stability through this period of global upheaval.
Information note
The next scheduled date for announcing the overnight rate target is October 28, 2026. The Bank's next MPR will be released at the same time.
Canada Housing Starts Slow: What Buyers Should Know
Canada is still building a significant number of homes, but the latest housing construction numbers show that the pace of new projects is beginning to slow.
For Canadians hoping to buy a home, that may sound like bad news. If fewer homes are being built, does that mean prices are about to rise? Will affordability get worse? Should you buy now before supply becomes tighter?
The answer is more complicated than any one housing headline suggests.
Canada Mortgage and Housing Corporation, or CMHC, reported that the six-month trend in housing starts edged lower in July 2026. Actual housing starts in larger population centres were also considerably lower than they were in July 2025.
At the same time, hundreds of thousands of homes are already under construction, completions increased in July, and housing conditions vary significantly from one part of Canada to another.
For homebuyers, homeowners approaching a mortgage renewal, and people considering refinancing, the important question is not simply whether housing starts are up or down. It is how housing supply, local demand, borrowing costs and your own financial position come together.
What Are Housing Starts?
A housing start is recorded when construction begins on a new residential unit. Housing starts can include single-detached homes, townhomes, condominiums, apartments and other types of residential construction.
Housing starts are closely watched because they provide an indication of how much new housing may eventually become available.
However, a housing start does not mean a completed home is immediately available for purchase. Depending on the type of development, construction can take many months or even years.
That distinction is important when interpreting Canada's latest numbers.
What Do Canada's Latest Housing Start Numbers Show?
CMHC reported that Canada's six-month housing-start trend declined slightly in July 2026 to approximately 247,000 units on a seasonally adjusted annual basis.
The monthly seasonally adjusted annual rate was approximately 229,000 units, down 5% from June.
In centres with populations of at least 10,000, actual July housing starts were 19% lower than they were in July 2025. Looking at the first seven months of the year rather than just one month, starts were down 4% compared with the same period in 2025.
That difference matters.
A 19% year-over-year monthly decline attracts attention, but housing construction can be volatile from one month to another, particularly when large multi-unit projects begin or are delayed. CMHC specifically uses a six-month trend measure to provide a clearer picture of the direction of construction activity.
The broader message is that new construction is moderating, not that homebuilding across Canada has suddenly stopped.
Canada Still Has a Large Supply of Homes Under Construction
There is another part of the latest housing data that prospective buyers should not overlook.
CMHC reported approximately 373,000 units under construction in centres with populations of at least 50,000 in July. Almost 20,000 units were completed during the month, an increase from June.
That existing construction pipeline means additional housing will continue reaching the market even while fewer new projects begin.
The more important concern is what happens further down the road. If fewer projects consistently begin construction, Canada could eventually have fewer new homes entering the market once today's construction pipeline is completed.
For affordability, housing supply therefore needs to be viewed over several years rather than several weeks.
Do Fewer Housing Starts Mean Home Prices Will Rise?
Not necessarily, and certainly not automatically.
Home prices depend on both supply and demand.
Fewer new homes can create upward pressure on prices when there are many buyers competing for limited inventory. But if buyer demand is also weak, slower construction does not automatically translate into higher prices.
CMHC's 2026 housing outlook has highlighted subdued housing demand, affordability constraints, modest income growth, slower population growth and economic uncertainty as factors affecting the Canadian housing market.
In some markets, buyers may therefore have more negotiating room even while new construction is slowing. In other markets where population growth, employment and housing demand remain stronger, limited supply may continue to make buying more competitive.
This is why national headlines should never replace an assessment of the specific community where you are planning to buy.
Housing Markets Across Canada Are Not Moving Together
Canada does not have one single housing market.
CMHC's outlook shows meaningful regional differences. Construction and housing activity in parts of Ontario and British Columbia have been weaker, while some Prairie and Quebec markets have experienced comparatively stronger conditions.
Even within the same province, conditions can differ dramatically between major cities, suburbs and smaller communities.
For a homebuyer, this means the most useful questions are local:
How many homes are currently listed in the area where you want to buy?
How quickly are suitable properties selling?
Are buyers regularly competing for the same homes?
Are substantial new developments expected to be completed nearby?
Are prices in your specific property category rising, falling or remaining relatively stable?
Those factors can tell you much more about your actual buying environment than a single national statistic.
Could Slower Construction Affect Home Affordability?
Over the longer term, housing supply is an important part of affordability.
When housing construction fails to keep pace with household demand over an extended period, buyers and renters can face greater competition for available homes.
CMHC continues to identify housing affordability as a major challenge in Canada and has emphasized the importance of adding sufficient housing supply over time.
But affordability is not determined by housing supply alone.
A buyer's ability to afford a home is also affected by mortgage rates, household income, property taxes, heating costs, condominium fees, insurance, debts and the amount available for a down payment.
A home could become less expensive while still being unaffordable to a particular household if monthly borrowing costs or other expenses are too high.
That is why it is helpful to define affordability based on your monthly budget rather than simply the maximum mortgage amount for which you may qualify.
Will Slower Housing Starts Cause Mortgage Rates to Fall?
Slower home construction does not directly determine Canadian mortgage rates.
Variable mortgage rates are more directly affected by changes in lenders' prime rates, which are influenced by the Bank of Canada's policy interest rate. Fixed mortgage rates are influenced by broader financial market conditions and lenders' funding costs.
The Bank of Canada held its policy interest rate at 2.25% at its July 15, 2026 decision.
The Bank considers a much broader range of economic information when making interest-rate decisions, including inflation, economic growth and labour-market conditions.
For example, Statistics Canada reported that Canada's Consumer Price Index increased 3.0% year over year in July. Employment also increased by 75,000 in July, while the unemployment rate declined to 6.4%.
Those types of indicators matter considerably more to the interest-rate outlook than a single month's housing-start data.
Homebuyers should therefore be cautious about assuming that weaker construction means lower mortgage rates are coming.
Should You Wait for Mortgage Rates to Fall Before Buying?
Trying to perfectly time both mortgage rates and home prices is extremely difficult.
If mortgage rates decline in the future, borrowing costs may become more affordable. But improved affordability can also encourage more buyers to return to the market, potentially increasing competition for suitable homes.
Conversely, purchasing when demand is softer may provide better negotiating conditions, even if today's mortgage rate is not the lowest rate that might eventually become available.
The decision should depend on your circumstances rather than a prediction about where rates or prices will move next.
A financially prepared buyer should know:
How much they can comfortably spend each month
How much cash will remain after the down payment and closing costs
How their payment could change at a higher interest rate
Whether they plan to remain in the property long enough for buying to make sense
Whether they have sufficient emergency savings after the purchase
These are usually more useful questions than asking whether this particular month is the perfect time to buy.
What Does Slower Housing Construction Mean for Mortgage Renewals?
If you already own a home and your mortgage is approaching renewal, housing-start data should not be the primary factor driving your decision.
Your renewal should focus on your remaining mortgage balance, current interest rate, available renewal options, payment preferences, future plans and overall household budget.
Local housing conditions can still matter if you are considering selling instead of renewing, particularly if available inventory and buyer demand have changed significantly in your community.
But if you intend to remain in the home, your priority should be comparing mortgage options rather than trying to forecast new construction.
Starting the renewal conversation early can also provide more time to compare lenders, terms and mortgage structures instead of automatically accepting the first renewal offer you receive.
What Does It Mean If You Are Considering Refinancing?
Housing market conditions can be more relevant when refinancing because your property's value may affect how much equity is available.
If you are refinancing to consolidate debt, access equity, renovate your home or restructure your mortgage, the lender may require an appraisal or another method of establishing the property's current value.
A slower housing market does not necessarily prevent refinancing, but homeowners should avoid assuming their property is worth a particular amount based on an older sale or previous market peak.
The amount you can refinance will depend on lender requirements, your income, debts, credit profile, property value and applicable Canadian mortgage rules.
What Should Canadian Homebuyers Take From the Latest Housing Data?
The biggest takeaway is that Canada's housing market is currently sending mixed signals.
New housing starts are moderating, which could become an affordability concern if the slowdown persists and future supply becomes constrained.
At the same time, Canada still has a substantial number of homes under construction, housing demand remains relatively subdued in several markets, and regional conditions differ considerably.
For someone considering purchasing a home, that argues for preparation rather than panic.
Understand what you can afford. Review the mortgage options available to you. Look closely at conditions in the specific community and property type you are considering. Keep enough room in your budget to manage future expenses and rate changes.
Housing headlines can help explain what is happening nationally, but a good mortgage decision is ultimately personal.
Frequently Asked Questions
1. Will slower housing starts make Canadian homes more expensive?
Not automatically. Fewer new homes can put upward pressure on prices over time if demand exceeds available supply, but home prices also depend on buyer demand, employment, incomes, mortgage rates and local inventory. Conditions can vary significantly between Canadian housing markets.
2. Do lower housing starts mean mortgage rates will fall?
No. Housing starts are only one indicator of economic activity. Mortgage rates are affected by broader factors including Bank of Canada policy, inflation, financial markets and lenders' funding costs. A slowdown in construction does not guarantee lower mortgage rates.
3. Should I delay buying a home because construction is slowing?
Not necessarily. Your decision should depend on your finances, housing needs, local market conditions and how long you expect to own the property. Waiting for a perfect combination of lower prices and lower rates can be difficult because market conditions can change quickly.
4. Can a weaker housing market affect my ability to refinance?
It can. Refinancing often depends partly on your home's current value and available equity. If property values have declined in your area, the amount of equity available for refinancing may be lower. Income, debts, credit and lender qualification requirements also matter.
5. What should I do if my mortgage renews within the next year?
Review your mortgage early rather than waiting for the renewal notice. Consider your remaining balance, budget, future plans and whether a fixed or variable structure fits your situation. Comparing available options before renewal can give you more time to make an informed decision.
Canada Is Building More Homes, Why Is Buying Still Hard?
You may have seen headlines suggesting that Canada is building more housing. That sounds like good news for homebuyers, and in many ways it is. More homes are essential to improving housing choice and affordability over time.
However, an increase in housing construction does not automatically mean that suitable homes will immediately become more affordable to purchase.
Canada's housing market is more complicated than the total number of homes being built. The type of housing under construction, where it is located, how long it takes to complete and whether it is intended for renters or buyers all matter.
Mortgage rates, household income, home prices, down payment requirements and qualification rules also affect how much a buyer can afford. That means supply can improve while many Canadians continue to find homeownership financially difficult.
Housing Starts Increased in 2025, but the Details Matter
According to the Canada Mortgage and Housing Corporation, commonly known as CMHC, Canadian housing starts increased by 6% in 2025 to approximately 259,000 units.
That was meaningful progress, but the increase was not evenly distributed across housing types or communities.
Rental apartment construction was a major source of growth. CMHC reported that rental starts reached record levels in several large Canadian markets, including Calgary, Edmonton, Ottawa, Halifax and Montréal. Toronto also recorded its second-highest level of rental starts.
More purpose-built rental housing can benefit the broader housing system. It can provide renters with more options, help ease vacancy pressures and potentially moderate the pace of rent increases as completed units enter the market.
However, a new rental apartment does not directly add a home that a buyer can purchase. A household searching for a starter home, townhouse, condominium or detached property may therefore see little immediate improvement in the available ownership inventory.
More Construction Does Not Always Mean More Homes for Sale
Housing-start totals combine several different forms of construction. These can include single-detached homes, semi-detached homes, townhouses, condominiums and purpose-built rental apartments.
These homes serve different households and different parts of the market.
A city can report strong overall construction while still producing a limited number of homes that local buyers can realistically purchase. For example, a large increase in small rental apartments may improve rental availability but may not help a growing family looking for a three-bedroom home.
CMHC has also identified weakness in ownership-oriented construction. Condominium starts have been affected by softer presales, high construction costs, tighter financing conditions and weaker investor demand.
This matters because many condominium projects require a certain level of presales before construction financing can proceed. When buyers and investors hesitate, projects may be delayed, redesigned or cancelled.
A decline in condominium construction today can create a shortage of completed ownership units several years from now.
Housing Supply Takes Years to Reach Buyers
A housing start means construction has begun. It does not mean the home is ready for someone to occupy.
Larger projects can take several years to move from planning and approval to construction and final occupancy. Even after a project begins, buyers may wait a significant amount of time before the homes are completed.
This delay helps explain why an increase in current housing starts may not quickly reduce resale prices or create more immediate purchasing opportunities.
Housing supply also depends on more than construction activity. Municipal approvals, servicing, available land, infrastructure, labour availability, material costs and development financing can all affect how quickly new homes reach the market.
Supply improvements generally work gradually. They can increase choice, reduce competition and help prices become more closely aligned with household incomes, but those effects are unlikely to appear uniformly or immediately.
Canada Is Still Building Below the Estimated Need
CMHC estimates that Canada needs approximately 430,000 to 480,000 housing starts per year until 2035 to restore affordability to levels associated with the period before the pandemic.
That is considerably higher than the approximately 259,000 housing starts recorded in 2025.
The comparison does not mean every market faces the same shortage or that prices will move in the same direction everywhere. Housing conditions differ significantly among provinces, cities and neighbourhoods.
It does show the scale of the national challenge. Canada can make progress and still remain well short of the supply needed to meaningfully improve affordability.
Recent monthly figures also demonstrate that construction does not move in a straight line. CMHC reported that the national housing-start trend declined in June 2026 and that year-to-date actual starts were slightly lower than during the same period in 2025.
Monthly changes should not be viewed in isolation, but they reinforce the importance of looking beyond a single positive headline.
Why Home Prices Can Remain High When Supply Is Growing
Home prices are shaped by both supply and demand. Adding housing can help, but prices may remain elevated when the number of qualified buyers continues to exceed the number of suitable homes available in a particular area or price range.
Several factors can maintain affordability pressure even as construction continues:
New construction may be concentrated in rentals rather than ownership housing.
Many new homes may be smaller apartments rather than family-sized properties.
Construction may be occurring outside the neighbourhoods where demand is strongest.
New-build prices may reflect high land, labour, material and financing costs.
Completed homes may take years to reach the market.
Resale inventory may remain limited in desirable communities.
Buyer demand may return more quickly than builders can increase supply.
A buyer may therefore hear that thousands of new units are being built while still encountering limited selection within their preferred location, property type and budget.
Mortgage Rates Remain a Major Part of Affordability
Housing supply is only one part of the affordability calculation. Mortgage rates can have an immediate effect on the payment associated with a home purchase.
When mortgage rates are higher, the same loan amount produces a higher payment. Buyers may also qualify for less financing because federally regulated lenders generally assess uninsured mortgages using the mortgage stress test.
Borrowers are typically required to qualify at the greater of their contract rate plus two percentage points or the minimum qualifying rate established under the applicable federal rules.
This qualifying process is designed to determine whether a borrower could manage higher payments. It can also reduce the maximum mortgage available to a household compared with what the payment at the contract rate alone might suggest.
A moderate decrease in a property's asking price may not fully offset the effect of higher borrowing costs. Conversely, lower mortgage rates can improve a buyer's purchasing power, but they can also encourage more buyers to re-enter the market and increase competition for a limited number of homes.
This is why waiting for rates to decline does not guarantee that buying will become easier. The price, rate, available inventory and level of buyer competition can all change at the same time.
What This Means for Canadians Planning to Buy
Buyers should focus on their own numbers rather than trying to time the entire housing market.
Start by determining what monthly payment fits comfortably within your household budget. This should include more than the mortgage payment.
A realistic housing budget may need to account for:
Property taxes
Home insurance
Utilities and heating
Condominium fees, when applicable
Maintenance and repair costs
Closing costs
Moving expenses
An emergency fund
A mortgage pre-approval can help establish an estimated financing range, but the maximum amount a lender may approve is not automatically the amount you should spend.
A lower purchase price can leave more room for savings, maintenance and future financial changes. It may also provide greater flexibility at renewal if mortgage rates or household expenses change.
Buyers who are flexible about property type or location may find more opportunities. Missing-middle housing, including townhouses, duplexes, multiplex units and low-rise apartments, may provide alternatives between a high-rise condominium and a detached home.
What Increased Supply Means for Mortgage Renewals
Housing construction does not directly determine the rate offered at mortgage renewal. Fixed and variable mortgage pricing is influenced by broader financial conditions, including bond yields, lender funding costs, competition and expectations for monetary policy.
However, housing-market conditions can still affect a renewal strategy.
A homeowner who expects to move may want to consider the available inventory and likely selling conditions in their local market before selecting a new mortgage term. Portability, prepayment privileges and penalties can be important when a move is possible before the new term ends.
Homeowners should not assume that accepting their current lender's first renewal offer is the only option. Reviewing the mortgage several months before maturity can create time to compare rates, terms and features.
Switching lenders normally requires qualification and documentation. Starting early can help identify potential issues involving income verification, credit, property value or debt levels before the renewal deadline.
What Housing Conditions Mean for Refinancing
Refinancing can allow an eligible homeowner to replace an existing mortgage with a new one, potentially to consolidate debt, access equity, change the mortgage structure or fund a major expense.
The available amount depends partly on the property's appraised value and the lender's loan-to-value limits. A strong increase in housing supply does not guarantee that every property's value will rise. Local sales, comparable properties, housing type and neighbourhood conditions can all affect an appraisal.
A refinance also requires careful cost analysis. Potential expenses can include a mortgage penalty, appraisal fee, legal costs and lender fees. Extending debt over a longer amortization can lower the monthly payment while increasing the total interest paid over time.
The decision should therefore be based on the complete financial outcome, not only the size of the new payment.
Can More Housing Eventually Improve Affordability?
Building more homes is essential to improving affordability, but the supply needs to match the needs of Canadian households.
That includes rental homes, starter homes, family-sized properties, accessible homes, affordable housing and options for seniors. It also includes housing near employment, transportation, schools and essential services.
More supply can gradually give buyers and renters greater choice. It can reduce the pressure created when too many households compete for too few suitable homes.
However, Canada's housing shortage developed over many years and will not be resolved by one strong construction year. High development costs, lengthy approval processes, labour constraints and weakness in ownership-oriented projects remain important challenges.
For individual buyers, the most practical response is to prepare for the market that exists today while protecting against future uncertainty.
A Strong Mortgage Plan Matters More Than a Market Prediction
No one can know with certainty where home prices or mortgage rates will be when you are ready to buy, renew or refinance.
A sound mortgage plan does not depend on a perfect forecast. It considers your income, debts, down payment, credit, expected length of ownership and ability to manage changing expenses.
Before making a decision, compare more than the advertised interest rate. Mortgage penalties, prepayment options, portability, restrictions and renewal terms can materially affect the long-term cost and flexibility of the mortgage.
Canada is making progress on housing construction, but the type and pace of development help explain why ownership remains difficult for many households. Understanding that difference can help you set realistic expectations and make a better-informed mortgage decision.
Frequently Asked Questions
Will building more homes cause Canadian home prices to fall?
More housing supply can reduce competition and improve affordability over time, but it does not guarantee that prices will fall. Local demand, mortgage rates, employment, available listings and the types of homes being built also influence prices.
Why does rental construction matter to someone who wants to buy?
More rental housing can give renters additional options and may reduce pressure on rents as units are completed. It can also give households more time to save and prepare for ownership, but it does not directly increase the number of homes available to purchase.
Does a housing start mean the home is available now?
No. A housing start means construction has begun. Depending on the project, completion and occupancy may still be months or years away.
Should I wait for more housing supply before buying a home?
Waiting may make sense when your finances are not ready, but future prices, rates and inventory cannot be predicted with certainty. Base the decision on your budget, down payment, expected length of ownership and ability to manage the full cost of the home.
Can a mortgage broker help me understand what I can afford?
Yes. A mortgage professional can review your income, debts, down payment and credit, estimate your qualification range and compare mortgage options. You should also establish a personal budget because the maximum mortgage available may be higher than the payment you are comfortable carrying.
Should Canadian Homebuyers Purchase Now or Wait for More Housing Supply?
Canadian homebuyers are hearing two different messages. One suggests that more homes are being built and buyers should wait for additional supply. The other warns that slower construction could limit future choices and keep desirable properties competitive.
Both situations can exist at the same time. The right decision depends on the local housing market, the type of home you need and whether you are financially prepared to purchase.
More housing supply does not automatically mean every buyer will have access to a larger selection of affordable homes. New construction can include rental apartments, condominiums, townhouses, detached homes and other property types. A rise in one category may do little to improve availability in another.
For buyers, the question is not simply whether Canada is building more homes. The more useful question is whether the right type of housing is becoming available in the community and price range where you want to purchase.
What Is Happening With Canadian Housing Supply?
Canada continues to face housing supply and affordability challenges. Governments and municipalities are encouraging additional construction, but new housing takes time to plan, approve and complete.
Development costs, financing conditions, labour availability, municipal approvals and buyer demand can all affect whether a proposed project moves forward.
Even when construction begins, buyers may wait several years before the homes are ready for occupancy. Some projects may also be delayed, redesigned or cancelled if costs rise or sales expectations are not met.
This means today's housing starts may not immediately improve the selection available to someone hoping to purchase within the next six or twelve months.
Why More Housing Starts Do Not Always Mean More Homes to Buy
A housing start is recorded when construction begins. It does not mean the property is complete, available for immediate purchase or affordable for the average household.
A significant portion of new construction may also be intended for renters rather than homeowners. Additional rental housing can still benefit the overall market, but it may not increase the number of detached homes, townhouses or condominiums available for purchase.
Homebuyers should look beyond national construction totals and consider:
Whether the new homes are intended for renters or owners
The types and sizes of homes being built
The communities where construction is occurring
Expected completion dates
The projected purchase prices
Whether the homes meet the needs of local buyers
Waiting for more construction does not guarantee that the right property will become available at a lower price.
Will Home Prices Fall if Buyers Wait?
There is no single Canadian housing market. Conditions can vary significantly by province, city, neighbourhood and property type.
One community may have a large number of listings and slower sales, while another may have limited inventory and continued competition among buyers.
A softer local market can provide buyers with more negotiating power, additional time to arrange inspections and a better opportunity to include financing conditions. However, a lower purchase price does not automatically make a home more affordable.
The total cost of homeownership also depends on:
The mortgage interest rate
The size of the down payment
The amortization period
Property taxes
Home insurance
Utilities and maintenance
Condominium fees, when applicable
Closing costs and moving expenses
A buyer who waits for prices to decline could still face a higher monthly mortgage payment if interest rates increase. Another buyer may benefit from waiting because the additional time allows them to save a larger down payment, reduce debt or improve their credit profile.
How Mortgage Rates Affect the Decision to Buy or Wait
Mortgage rates are one of the most important factors affecting home affordability.
Variable mortgage rates are influenced by changes in the Bank of Canada's overnight rate. Fixed mortgage rates are influenced more heavily by bond yields, lender funding costs, competition and market expectations.
This means mortgage rates can change even when the Bank of Canada does not announce a change to its policy rate.
A lower purchase price may be offset by a higher mortgage rate. Similarly, a slightly higher purchase price may still produce a manageable payment if the mortgage rate and down payment are favourable.
Buyers should compare complete monthly payment scenarios instead of focusing only on the asking price or the advertised interest rate.
How the Mortgage Stress Test Affects Affordability
Canadian borrowers who apply through federally regulated lenders are generally required to qualify under the mortgage stress test.
The qualifying rate is generally the greater of the borrower's contractual mortgage rate plus two percentage points or the minimum qualifying rate established by the federal government.
The stress test is intended to confirm that borrowers could manage higher payments if interest rates increase. It can also reduce the maximum mortgage amount available to a buyer.
A mortgage approval should not automatically be treated as a recommended spending limit. Buyers should leave room in their budgets for maintenance, repairs, rising household costs and unexpected expenses.
When Buying Now May Make Sense
Buying now may be reasonable when you are financially prepared and find a property that fits your needs, budget and long-term plans.
You may be in a strong position to purchase when:
You have stable income and employment
You have saved an appropriate down payment
You have funds available for closing costs
You will still have emergency savings after the purchase
The monthly payment fits comfortably within your budget
You expect to remain in the home for several years
The property meets your needs without requiring financial overextension
Your local market currently offers reasonable selection and negotiating opportunities
In a balanced or slower market, buyers may have more time to review documents, arrange a home inspection and include protective conditions in an offer.
These advantages can become harder to obtain if demand increases and desirable homes begin attracting multiple offers.
When Waiting May Be the Better Decision
Waiting can be a responsible choice when purchasing today would place too much pressure on your finances.
It may be better to delay a purchase when:
Your income or employment situation is uncertain
You need time to improve your credit
Your down payment would leave you without emergency savings
You are carrying high-interest consumer debt
You are unsure where you want to live
You may need to move again within a short period
The available homes do not meet your needs
Your expected housing costs would prevent you from meeting other financial obligations
Waiting is most useful when it is supported by a clear financial plan.
For example, you may decide to save a specific additional amount, pay down a vehicle loan, improve your credit score or establish more stable employment before applying again.
Simply waiting for prices or mortgage rates to fall is not a complete strategy because neither outcome is guaranteed.
Could More Rental Supply Help Future Homebuyers?
Additional rental construction may still help prospective buyers, even when those properties are not available for purchase.
More rental choice can reduce the pressure to buy before you are financially ready. In communities where rental availability improves, tenants may have more flexibility to continue saving and preparing for homeownership.
This does not mean rents will decline in every market. Rental conditions remain highly local, and newly built units may cost more than older rental properties.
However, a more balanced rental market can give some households additional time to strengthen their finances without feeling forced into an immediate purchase.
What Renewing Homeowners Should Consider
Housing supply also matters to existing homeowners who are approaching a mortgage renewal.
Some homeowners may be deciding whether to remain in their current property, sell and move, or refinance to improve cash flow.
Before accepting a mortgage renewal offer, homeowners should review:
The new interest rate
The expected mortgage payment
The remaining amortization
Prepayment privileges
Portability options
Potential penalties
Plans to move or sell during the next mortgage term
A homeowner who expects to move should consider more than the lowest available rate. Mortgage portability and penalty calculations may become important if the property is sold before the end of the term.
Could Refinancing Improve Your Financial Position?
Some homeowners consider refinancing before purchasing another property or while deciding whether to remain in their existing home.
Refinancing may be used to access home equity, consolidate debt, complete renovations or restructure mortgage payments.
However, refinancing can involve mortgage penalties, appraisal expenses, legal costs and a longer repayment period. Reducing the monthly payment by extending the amortization can increase the total interest paid over time.
The costs and benefits should be reviewed carefully before making a decision.
Buying a Newly Built Home Requires Additional Planning
Buyers considering a newly built home should understand that the financing process may differ from purchasing an existing property.
Possible considerations include:
Construction delays
Deposit schedules
Changes in mortgage rates before closing
Appraisal risks
Development charges and closing adjustments
Occupancy fees for some condominium purchases
Changes to personal income or credit before completion
A mortgage approval received when the purchase agreement is signed may not remain valid until the home is completed. Buyers should understand how long a rate can be held and what may be required to qualify again before closing.
A Better Question Than "Should I Buy Now?"
Instead of asking whether every Canadian should buy now or wait, ask whether you are prepared to purchase the right home at a payment you can manage.
Housing forecasts provide useful context, but they cannot predict the future price of a specific property or determine whether a mortgage is appropriate for your household.
A practical homebuying decision should consider:
Your current income and employment stability
Your down payment and emergency savings
Your debts and monthly obligations
The mortgage payment under different interest rate scenarios
Local inventory and recent comparable sales
Your expected time in the property
Your family and lifestyle needs
The best opportunity is not always the home with the lowest asking price. It is a suitable property purchased with financing that remains manageable after the transaction is complete.
Make the Decision Based on Your Readiness
Canada needs more housing, but new supply will not arrive evenly across every community or property type.
Additional construction may improve rental availability while doing little to increase the number of ownership properties available in a buyer's preferred neighbourhood.
Homebuyers should not rush because of a forecast. They should also avoid postponing a suitable purchase solely because they expect dramatically lower prices, lower mortgage rates or a sudden increase in available homes.
A mortgage pre-qualification can help you understand your current purchasing position, compare realistic payment scenarios and establish a comfortable price range before you begin making offers.
Frequently Asked Questions
Is 2026 a good time to buy a home in Canada?
It may be a good time for financially prepared buyers who find a suitable property with an affordable monthly payment. The decision should be based on local market conditions, personal finances and long-term housing needs.
Will Canadian home prices fall when more homes are built?
Not necessarily. The effect of new construction depends on the location, property type, price and number of homes completed. Rental construction may improve the rental market without significantly increasing the number of homes available for purchase.
Should I wait for mortgage rates to decline before buying?
Waiting for lower mortgage rates involves uncertainty. Rates, prices and housing inventory can all change. Compare what you can comfortably afford today with the financial improvements you realistically expect to make by waiting.
How much house should I buy if a lender approves me for more?
A mortgage approval represents the maximum amount a lender may be willing to provide. It does not necessarily represent a comfortable household budget. Include property taxes, utilities, insurance, maintenance and other obligations when choosing a purchase price.
What should I do before deciding whether to buy or wait?
Review your income, credit, debts, down payment and emergency savings. Obtain a mortgage qualification review and compare monthly payments at several purchase prices before making a decision.
July 15-2026 - Bank of Canada maintains the policy rate at 2.25%
The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
Canada's economy is showing signs of improvement. Growth is picking up and inflation is projected to ease gradually from its recent spike. There are still important risks and uncertainties related to the war in the Middle East and US trade policy.
Since the April Monetary Policy Report (MPR), global economic prospects have been dented by higher oil prices stemming from the Middle East conflict. At the same time, the build-out of artificial intelligence (AI) is supporting economic activity in a growing number of countries. Oil prices are still lower than their peak in April but the situation in the Middle East remains volatile. The path for global inflation is highly dependent on how the conflict unfolds.
The US economy is growing at about 2½%, mostly because of strong consumption and booming AI investment. China's economy is expanding solidly thanks to robust exports. Economic activity in the euro area has been weighed down by high energy prices, but is expected to strengthen in the second half of the year if energy prices come down as anticipated.
The Bank projects global GDP growth will slow to 2¾% in 2026, mostly because of the effects of the Middle East conflict, and recover to around 3¼% in 2027 and 2028.
Financial conditions in Canada have eased since April and global equity markets have been buoyant. US bond yields have risen, while those in Canada are little changed. This differential has contributed to the depreciation of the Canadian dollar.
Canada's GDP data over the past year was choppy and growth stalled as the economy adjusted to new tariffs, high uncertainty and slower population growth. Labour market conditions have remained soft, reflecting ongoing economic slack. The unemployment rate was 6.5% in June and has hovered in a range of 6½%-7% since the end of 2024. There are clear signs that economic growth has resumed in the second quarter, with growth estimated at 2½%. While this largely reflects the unwinding of temporary factors, sources of economic growth appear to be broadening.
Recent indicators point to continued solid consumer spending. Housing activity has been weak but looks to be stabilizing. Export growth has resumed and is expected to continue to strengthen, albeit on a lower path. Business investment is projected to pick up modestly, boosted in the near term by the oil and gas sector. Although the Canada-US-Mexico Agreement is now subject to annual reviews, more businesses report they are finding ways to navigate through the uncertainty. Government spending also contributes to higher economic activity over the projection.
Following GDP growth of 0.7% in 2026, the Bank projects the economy will grow by 1.8% in both 2027 and 2028. As the recovery proceeds, economic slack will be gradually absorbed.
CPI inflation rose further to 3.2% in May, mainly because of higher gasoline prices linked to the war in the Middle East. Excluding gasoline, inflation was 2.2% and measures of core inflation remained close to 2%. Near-term inflation expectations are sensitive to changes in gasoline prices but longer-term inflation expectations remain well anchored. War-related cost pressures are still working their way through some consumer prices but are being offset by downward pressure on other prices from continued economic slack. CPI inflation is expected to stay elevated in June and then ease gradually in the coming months, returning to around 2% in early 2027, although this forecast is dependent on the path for oil and gasoline prices. Inflation is forecast to average around 2% in 2027 and 2028, albeit with some monthly fluctuations because of base-year effects.
Governing Council judges the current policy rate remains appropriate to sustain the economic recovery and bring inflation back to the 2% target, in line with the MPR projections. Uncertainty is still high. Governing Council will continue to assess the strength of the Canadian economy and the outlook for inflation, and is prepared to adjust monetary policy as needed. The Bank is committed to maintaining Canadians' confidence in price stability through this period of global upheaval.
Information note
The next scheduled date for announcing the overnight rate target is September 2, 2026. The Bank's next MPR will be released on October 28, 2026.
