🔴 January CPI Falls to 2.3% — Shelter Costs Below 2% for First Time in 5 Years
Statistics Canada reported on February 17 that inflation eased to 2.3% in January, down from 2.4% in December, driven by falling gasoline prices. Shelter cost growth slowed to 1.7% — the first time it has fallen below 2.0% in nearly five years. Mortgage interest costs rose just 1.2% YoY, down from 1.7% in December. All three BoC core measures softened: CPI-trim fell to 2.4%, CPI-median to 2.5%, and CPI-common to 2.7%. The cooler inflation print supports the case for steady or lower rates. Next CPI release: March 16, 2026.
🔴 CREA: National Home Sales Fell 5.8% in January as Winter Storm Hits
CREA reported on February 18 that national home sales fell 5.8% month-over-month in January, with actual sales 16.2% below January 2025. The national average price dipped to $652,941, down 2.6% YoY. The MLS Home Price Index fell 0.9% monthly and 4.9% annually. New listings surged 7.3% MoM as sellers entered the market, pushing the sales-to-new-listings ratio to 45% (long-term average: 54.8%). Months of inventory rose to 4.9. CREA attributes much of the decline to a historic winter storm in southern Ontario rather than a fundamental demand shift.
🔴 GoC 5-Year Bond Falls to 2.77%, Down 17 bps Month-to-Date
The Government of Canada 5-year bond yield fell another basis point to 2.77% on February 19, extending the decline from 2.94% at the start of the month to 17 basis points. The 10-year GoC bond eased to 3.24%. The sustained fall across the curve was driven by softer-than-expected Canadian inflation data and continued US trade-related uncertainty pulling global sovereign yields lower. Bond yields in the 2.7% range support the potential for further fixed mortgage rate improvements in coming weeks.
CMB 5-Year Hits 3.00% — Down 2 bps Week-over-Week
The Canada Mortgage Bond 5-year yield fell to 3.00% as of February 19, down 1 bps on the day and 2 bps from last week's 3.02%. The CMB 10-year holds steady at 3.56%. Government of Canada 5-year bond at 2.77% and 10-year at 3.24% continue to support favourable pricing for insured mortgage originations. The CMB spread over GoC 5-year sits at about 23 bps as government purchases continue to compress spreads.
🔴 Best 5-Year Fixed Rates at 3.69% Insured — Banks Still Lagging at 4.19%
The best available 5-year fixed mortgage rate through the broker channel is 3.69% for insured/high-ratio mortgages, with conventional at 3.74%. Bond yields dropping into the 2.7% range could push these lower. Among big banks, CIBC leads at 4.19% — a full 50 bps above the best broker rate. The average 5-year fixed across all lenders is 4.24%. Best variable rates are around 3.45%, now priced better than fixed for the first time in three years.
Markets Price BoC Hold Through 2026 — Some Banks See Rate Hike by Year-End
Financial markets assign just a 5-7% probability of any BoC rate change at the March 18 decision. Most major banks (CIBC, RBC, TD, BMO) now forecast the policy rate staying at 2.25% through 2026. However, National Bank and Scotiabank see the rate rising to 2.75% by Q4 2026 if inflation proves sticky. Nesto's forecast even assigns a higher probability of a hike than a cut by year-end. The next BoC announcement is March 18, 2026.
Bank of Canada Releases January Deliberation Summary
The Bank of Canada published the summary of deliberations from its January 28 rate decision on February 11. The Governing Council weighed trade policy uncertainty against progress on inflation, noting that the "timing or direction" of the next rate change remains uncertain. The summary highlights concern over the CUSMA review and potential US tariff escalation as key risks to Canada's economic outlook.
CMHC: 1.5 Million Renewals Already Done, Another Million Coming in 2026
New CMHC research shows Canada is deep in a mortgage renewal cycle. Over 1.5 million households have already renewed at higher rates, with another million expected this year. For those renewing from ultra-low pandemic-era fixed rates (2% or below), payment increases are expected to average around 20%. Arrears have ticked up but remain historically low – partly because many borrowers extended their amortization periods.
Bank of Canada Holds Rate at 2.25%
The Bank of Canada held its policy rate steady on January 28, 2026, citing uncertainty around trade negotiations. Governor Macklem noted the "timing or direction" of the next move remains unclear. This followed seven consecutive cuts since June 2024, taking the rate from 5.00% to 2.25%.
CMB Annual Limit Raised to $80 Billion for 2026
Budget 2025 raised the Canada Mortgage Bonds annual cap from $60B to $80B, effective 2026. The extra $20B is earmarked for multi-unit housing. As of September 2025, the government has purchased $50.8B in CMBs (48% of total issued since Feb 2024), compressing 5-year CMB spreads from 24 to 15 bps.
National Home Sales Fell 1.9% in 2025, CREA Forecasts 5.1% Rebound
CREA reports 470,314 transactions in 2025, down slightly from 2024. The national average price is forecast to rise 2.8% to $698,881 in 2026. Sales are expected to increase 5.1% driven largely by pent-up demand in Ontario and BC. Next CREA forecast update: April 16, 2026.
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