State of the Housing Market in Canada 2026
Canada’s housing market looks calmer on the surface than it did two years ago. The Bank of Canada has held its policy rate steady through a long run of decisions, inflation outside of gasoline is sitting near target, and the peak of the renewal wave is behind us. None of that has made housing meaningfully easier to afford.
New consumer research from Mortgage Professionals Canada points to a different pressure point. For most mortgage holders, the problem is no longer where rates are going. It’s how little room the household budget has left if the payment moves at all.
Key Takeaways
- One-third of mortgage holders expect to renew within the next 12 months, and 67% of them are anxious about renewing at a higher rate.
- Roughly half of all mortgage holders have thin payment buffers: 6% already struggle, and another 44% would struggle before payments rose 15%.
- Only 2% of non-owners name high interest rates as the reason they don’t expect to buy, while 23% point to home prices.
- More than one-third of Canadians say they need rental income from their own home to afford ownership, up from 25% in 2021.
- Confidence has held up, with 76% still calling Canadian real estate a good long-term investment.
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What the Latest National Survey Shows
The 2026 Mortgage Professionals Canada report, titled Canadians’ Mortgage and Homeownership Outlook, draws on a 20-minute online survey of close to 2,000 Canadians across every region, conducted by Bond Brand Loyalty between February 5 and 25, 2026.
Its framing is deliberately narrow. Rather than asking where the market is heading, it asks how much financial slack households actually have. That distinction matters, because the two questions have started to produce very different answers.
“Renewal pressure is not just about interest rates,” said Lauren van den Berg, president and CEO of Mortgage Professionals Canada, on the report’s release. Her point is that borrowers arriving at renewal with thin buffers need planning and options more than they need a forecast.
Renewal Risk Has Become a Payment Buffer Problem
The report puts it plainly in its affordability spotlight: “Renewal risk is becoming a borrower-resilience issue.” One-third of mortgage holders expect to renew in the next 12 months, and 67% of that group say they’re anxious about doing it at a higher interest rate. Across all mortgage holders the picture is tighter than the headline suggests, with 6% already struggling to make their payments and another 44% saying they would have difficulty if payments rose by less than 15%.
Broken down further, 22% would struggle with an increase of 10% or less, and 23% would struggle somewhere between 10% and 14.9%. Only 49% could absorb an increase of 15% or more before running into difficulty.
So as of February 2026, about half of Canadian mortgage holders were operating with less than 15% of payment headroom. That is the binding constraint in this market, and it doesn’t loosen when the central bank holds.
What a 15% Payment Increase Actually Looks Like
Percentages hide the stakes, so it helps to run the arithmetic on your own number. On a $2,400 monthly mortgage payment, a 15% increase is $360 more each month, or $4,320 over a year. On a $3,200 payment, that same 15% works out to $480 a month and $5,760 a year.
Those are amounts most households feel right away. The payment shock calculator lets you model your own renewal against several scenarios before you commit to anything, and pairing that with a plan for managing payment shock is a far better use of your time than watching rate headlines.
Most Borrowers Still Renew With the Same Lender
MPC’s 2025 research found that 80% of Canadians who renewed stayed with the lender from their previous mortgage term. Among everyone who reached a decision, whether they stayed or switched, 58% named the interest rate as the deciding factor, followed by service (30%), avoiding the stress test (24%), and access to other financial products (18%).
Loyalty gets expensive when buffers are thin. A lender’s renewal offer is rarely their sharpest rate, and since 2024 a straight switch at renewal no longer requires requalifying at the stress-test rate, provided the balance and amortization stay the same. Comparing before you sign has never been cheaper. Broker use keeps climbing for the same reason: nearly 68% of Canadians surveyed said they would consider a mortgage broker next time, and 81% of those who have already used one said they would do it again.
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Recent Buyers and Newcomers Are Carrying the Most Strain
The national averages hide who is actually exposed. Among first-time buyers who purchased in the past five years, 66% are anxious about renewing at a higher rate and 37% regret the size of the mortgage they took on. Among Canadians new to the country, 68% are anxious and 57% regret their mortgage size.
Payment vulnerability follows the same pattern. Two-thirds of newcomers, 67%, are already struggling or would struggle before payments rose 15%, compared with 53% of recent first-time buyers. Both groups bought at higher prices, carry larger obligations, and have less margin for error, which is exactly where advice ahead of a renewal deadline earns its keep.
That cohort is overrepresented in nesto’s own book. Millennials account for 50% of nesto mortgage applicants in 2026, against a 44% national share reported by CMHC, a six-point skew toward the borrowers with the least renewal experience to draw on.
Newcomers also face a hurdle that has nothing to do with rates. A limited Canadian credit history narrows the lender list, so it pays to understand mortgage options for newcomers well before the offer stage.
More Canadians Are Renting Out Part of Their Home to Afford It
One of the report’s quieter findings deserves more attention than it has had. More than one-third of Canadians, 36%, now say they need to rent part of their home to afford ownership, up from 25% in 2021. Among recent first-time buyers the share is 29%. Among newcomers it reaches 53%.
That shift changes how households should approach qualifying. Rental income from a secondary suite can support a mortgage application, but lenders don’t all treat it the same way. Some add a portion of the projected rent to your qualifying income, others offset it against the property’s carrying costs, and how much they recognize depends on whether the unit is legal, self-contained and separately metered. The Canada Secondary Suite Loan Program also gives existing owners a financing route to build one.
If part of your affordability plan depends on rent, confirm how your lender counts it before you make an offer. A suite that pencils out on a spreadsheet can still fail to qualify.
Prepayment Penalties Are Still the Costliest Surprise
Among Canadians who broke their mortgage early, 78% avoided a prepayment penalty altogether. For those who did pay one, the average cost of breaking a mortgage before maturity nearly doubled in a single year, reaching $6,732 as of MPC’s 2025 report.
Penalties vary enormously between lenders because the calculation method varies. Interest rate differential (IRD) penalties can be especially steep on fixed-rate mortgages when rates have fallen since signing, which describes a great many 2021 and 2022 contracts. Confirm how your lender calculates before you assume a refinance is worth it.
Savings Still Fund Most Down Payments
Among first-time buyers over the past five years, 56% used personal savings or a co-buyer’s savings for the down payment. The remaining sources were a loan from a financial institution (18%), a gift from a parent or other family member (12%), an RRSP withdrawal including the Home Buyers’ Plan (9%), a loan from family or friends (3%), an employer loan (2%), and other sources (1%).
Of those who received help, 58% say they could not have covered the down payment without it. Family support has become structural rather than exceptional, which is part of why co-buying with friends keeps surfacing as a serious option.
Homeownership Expectations Have Improved but Stay Fragile
Pessimism has eased off its peak, with 32% of non-owners now saying they never expect to own a home, down from 51% in 2023 and back near the 33% recorded in 2022.
Sentiment is not the same as capacity, though. Two-thirds of non-owners (66%) say current conditions have delayed their plans, while 22% still expect to buy within two years, and nearly one in five of those are motivated mainly by the need to live somewhere less expensive.
The reasons they give are the most revealing part of the survey. Asked why they don’t expect to purchase, 36% say they’re satisfied where they are and don’t plan to move, 23% say home prices are too high, 12% don’t expect to save a large enough down payment, 10% say their finances feel too uncertain, and 2% cite high interest rates.
That last figure is worth sitting with. Interest rates rank near the bottom of the list. Prices, savings capacity and income stability are what keep people out, which means falling mortgage rates on their own will not unlock this pipeline.
Canadians Still Believe in Owning
Despite all of the above, 76% of Canadians agree that real estate in Canada is a good long-term investment, and 74% classify a mortgage as good debt. Among newcomers, that second figure rises to 79%, the highest of any segment in the report. Confidence runs consistently across first-time buyers, newcomers and non-owners alike.
Where the Financial Strain Is Actually Concentrated
National averages flatten a market that has become sharply uneven. CMHC’s Spring 2026 Residential Mortgage Industry Report puts the national 90-day-plus delinquency rate at 0.24% in the fourth quarter of 2025, up from 0.21% a year earlier but still below the pre-pandemic level of 0.28%.
Where that increase landed matters more than the national figure; arrears growth concentrated in Ontario, up 35% year over year, and most acutely in the Toronto census metropolitan area, up 45%. Total residential mortgage debt crossed $2.4 trillion over the same period, growing 4.8% from a year earlier.
CMHC’s own read is that arrears remain low by historical standards and the mortgage system is stable nationally, while pockets of real stress sit beneath the surface. The renewal wave is dissipating, but many borrowers are still absorbing rising financial pressure.
Montréal tells a different story. CMHC’s regional analysis finds delinquency risk there broadly stable, driven more by consumer credit stress than by housing market conditions, which remain relatively tight. If you’re reading national numbers to judge your own position, you’re reading the wrong number.
CMHC also credits the mortgage stress test with keeping arrears from climbing further. It’s a useful reminder that the 5.25% qualifying floor limiting how much you can borrow is the same rule cushioning the market you’re borrowing into.
Housing Supply Is Expanding and Contracting at the Same Time
Build Canada Homes has moved from announcement to delivery. The Build Canada Homes Act received Royal Assent on June 18, 2026, setting up the agency’s transition to a Crown corporation, and its direct-build and partnership projects now total more than 10,000 homes. Six federal sites in Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg and Edmonton are slated to break ground through summer and fall 2026, prioritizing modular and factory-built construction. In Quebec, a second phase of the partnership with the Société d’habitation du Québec brings the provincial total past 2,800 affordable homes.
Here is the part that rarely gets connected. While federal supply scales up, CMHC expects total 2026 housing starts to finish below 2025 levels, held back by construction costs and market conditions. Public building is growing inside a shrinking overall pipeline. For buyers, that means the affordability relief promised by new supply will likely arrive later, and far more unevenly, than the announcement volume suggests.
What This Means for Buyers, Renewers and Refinancers
Everyone in this market is planning around a tighter margin than they were three years ago. What differs is which margin binds first.
If You’re Buying
Affordability pressure is coming from prices and savings capacity rather than primarily from rates, so model the payment you can sustain instead of the maximum you qualify for. Personal savings and family gifts still fund most down payments, and more buyers are widening the search to smaller communities, different property types, or shared ownership. If rental income is part of the plan, verify the treatment with your lender first.
If You’re Renewing
Renewers are the largest group facing an immediate decision. Start early, and treat your lender’s first offer as an opening position rather than a conclusion. With roughly half of mortgage holders carrying under 15% of payment headroom, the gap between a renewal offer and a shopped rate can decide whether the next term feels comfortable or tight. Comparing renewal rates costs you nothing.
If You’re Refinancing
The refinancing math has tightened. Higher average breakage penalties and thinner equity mean the decision now turns on your own cash flow flexibility rather than on timing the market. Debt consolidation and cash-flow management remain the two reasons most owners proceed anyway, and it’s worth pricing a refinance against the penalty before you commit.
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Frequently Asked Questions (FAQ) About the State of the Housing Market in Canada
What does the 2026 Mortgage Professionals Canada report say about renewals?
The 2026 Mortgage Professionals Canada report found that one-third of mortgage holders expect to renew within the next 12 months, and 67% of that group are anxious about renewing at a higher interest rate. Its central finding is that renewal risk now depends less on the rate itself than on how much room a household has to absorb a larger payment.
How much of a payment increase can most Canadian mortgage holders absorb?
Most Canadian mortgage holders have limited room. As of the February 2026 survey, 6% were already struggling with payments, 22% would struggle with an increase of 10% or less, and 23% would struggle at an increase between 10% and 14.9%. Only 49% could absorb an increase of 15% or more before running into difficulty.
What is the mortgage stress test and how does it affect me?
The mortgage stress test requires you to qualify at the higher of 5.25% or your contract rate plus 2%. It caps how much you can borrow and shapes what you can afford. You need to pass it when you take out a new mortgage, refinance, or increase your loan amount or amortization. Since November 2024, a straight switch to a new lender at renewal is exempt, as long as the balance and amortization stay unchanged.
Why do some Canadians say they will never own a home?
About one-third of non-owners (32%) say they never expect to own a home, down from 51% in 2023. When asked why, most point to prices and savings capacity rather than borrowing costs. Home prices being too high was cited by 23%, an inability to save a down payment by 12%, and financial uncertainty by 10%, while only 2% named high interest rates.
Can rental income help you qualify for a mortgage in Canada?
Rental income can help you qualify for a mortgage in Canada, though lenders treat it differently. Some add a share of projected rent to your qualifying income, while others offset it against the property’s carrying costs; the amount recognized depends on whether the unit is legal, self-contained, and separately metered. Confirm your lender’s approach before you build rental income into your budget.
What should I do if my mortgage renews this year?
If your mortgage renews this year, start the process several months early, request your renewal statement, and compare offers from more than one lender before you sign. A mortgage expert can model what different rates would do to your payment and help you weigh whether staying, switching or restructuring makes the most sense.
Final Thoughts
Canada’s housing market has stabilized without becoming affordable. Rates have come well off their peak, arrears remain low by historical standards, and pessimism about ever owning has eased. Underneath that, half of mortgage holders are operating with less than 15% of payment room, newcomers and recent buyers are absorbing a disproportionate share of the strain, and more households are counting on rental income to make ownership work. Those are planning problems, not forecasting problems.
The nesto mortgage experts can model your renewal or purchase against several scenarios, compare your options across lenders, and help you land on a payment you can hold for a full term rather than one that only works if everything goes right.
Why Choose nesto
At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and the quality of their advice. nesto aims to transform the mortgage industry by providing honest advice and competitive rates through a 100% digital, transparent, and seamless process.
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