Mortgage & Wealth Strategies

Are Better Times Ahead for Borrowers?

January 27, 2026 | Posted by: Matt Broom-Hall

The latest Canadian inflation data is giving us a taste of hope—especially where it counts.

Even though Canada’s headline inflation ticked slightly higher to 2.4% in December (up from 2.2% in November), the devil is in the details—and they’re promising.

Core inflation measures, like CPI-trim and CPI-median, which the Bank of Canada (BoC) watches most closely, both cooled. On a three-month annualized basis, these numbers are now running below the Bank’s 2% target.

Shelter costs—responsible for a hefty 30% of the Consumer Price Index—are poised to drop significantly over the next few months. Why? Because the way StatsCan calculates shelter costs involves long lags based on historical mortgage rates and broad rental data. With fixed mortgage rates down from their highs and asking rents starting to decline in major centres like Calgary and Edmonton, lower shelter inflation is nearly baked into the cake for mid-2026.

What’s happening with mortgage rates in the meantime? So far, not much movement. Government of Canada bond yields remain in a tight range, which means fixed mortgage rates are holding steady for now. Variable-rate borrowers are still in a “wait and see” phase, with the BoC’s next rate decision coming this Wednesday. While no change is widely expected, the tone of the Bank's statement could shift market expectations.
That tone matters a lot. If the Bank signals that it's more worried about sluggish economic growth, trade uncertainty, or fading consumer confidence than about lingering inflation, bond yields could dip—and that could provide the spark for lower fixed mortgage rates in the coming weeks.

But don’t hold your breath for deep or sudden cuts. Despite progress on inflation, the Bank is likely to err toward caution, at least for the first half of the year. Some market voices have even floated the idea of another rate hike down the road, though most analysts—and frankly, common sense—lean toward the next move being a cut, perhaps in the second half of 2026.

The Latest on Canadian Rates

If you're buying: There's newfound breathing room to put financing conditions back into your offer. The days of “no conditions allowed” are fading. More balanced markets across Alberta and beyond mean you're more likely to succeed with a thoughtful, protective offer that includes a firm financing clause.

If you're refinancing: Fixed rates continue to offer decent value—especially 5-year terms, which have narrowed the premium gap compared to shorter terms. But if you’re betting that rates will fall by late 2026, and you're comfortable riding out some bumps along the way, variable rates might still win on long-term savings.

If you’re renewing: Don’t auto-renew. The gap between posted and competitive rates is wide, and every basis point matters right now. Pro tip: if you’re considering a short fixed term hoping for a better rate environment in 1–2 years, weigh that against early renewal options and prepayment charges.

Tip of the Week: Closing Costs Add Up Quickly

Over the past decade, including a financing condition in an Offer to Purchase wasn’t unusual in Alberta — but in hotter, more competitive moments, offers without conditions often had the edge. Buyers who could go in firm were typically viewed as stronger, especially when multiple offers were on the table.

Today, conditions are firmly back in the conversation.

As markets balance out, financing conditions are once again a practical and strategic tool for buyers who want protection without automatically weakening their offer. The key isn’t whether a financing condition is included — it’s how and when it’s used.

To learn how financing conditions really work, and when it may make sense to waive them, check out the related article here.

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