Desjardins sees Ontario buyers returning, but a Bank of Canada hike could cut the recovery short
Ontario’s housing market is set for a modest recovery in 2027, with Desjardins Group forecasting a near-5% rise in existing home sales. However, a looming Bank of Canada rate increase could erode the affordability gains brokers are only starting to see.
In its Ontario Housing Outlook, Desjardins senior economist Kari Norman projects provincial resales will reach about 167,000 units next year, up 4.7%, while the average price edges up 2.4% to roughly $825,000.
Lower prices, rising incomes, first-time buyer supports and pent-up demand should pull buyers back, though activity will stay well below long-term norms.
What a Bank of Canada hike would mean for Ontario borrowers
Desjardins expects two quarter-point increases, starting in late October. The central bank has held its overnight rate at 2.25% since October 2025, and its next decision lands October 28 as markets price in a growing likelihood of Bank of Canada rate hikes.
Grant Armstrong, chief growth officer at WealthOne Bank of Canada, saw the same signals at MortgageFest 2026.
“I think rates will probably go up in October. GIC rates are up 35 points in the last sixty to ninety days. Bank of Canada bond rates are up 60 points,” he said.
Stéfane Marion, chief economist at National Bank of Canada in Montréal, is less convinced. “I don’t think that the Bank of Canada should be hiking next week, and if they do hike, they can’t be too aggressive,” he told the Mortgage Professionals Canada conference in Calgary, where he also urged brokers to steer clients toward the five-year fixed mortgage.
Daren King of National Bank of Canada and Penelope Graham of Ratehub .ca say five-year fixed-rate mortgages have fallen to a record-low share of new lending as more borrowers opt for variable-rate and shorter-term products. https://t.co/CVKUTrrUL5
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 13, 2026
First-time buyers step into the gap
Toronto’s condo slump remains the biggest drag. Only 525 condo units were started in the City of Toronto in the first nine months of 2026, against nearly 14,000 a year over the previous decade, the report said – a collapse that has left many presale condo buyers facing appraisal shortfalls and lost deposits.
Temporary HST relief of up to $130,000 and Toronto development-charge cuts of 40% to 60% through August 2029 aim to restart activity.
For end users, the reset is an opening. “For people who actually need to buy real estate for their own use, I think that’s really the best time to get into the market,” Christine Xu, founder of Money Broker Canada, said at MortgageFest.
Sarita Free, a mortgage agent with Mortgage Powered Financial Group in Norfolk County, Ontario, sees the same shift.
“With the 30-year amortization that we can now go to, I find a lot of my buyers that have been on the sidelines are finally able to break into the market and stay in their hometown,” she said.
Desjardins projects housing starts will rise about 6% to nearly 65,000 units in 2027, still more than 30% below 2021 and 2022 levels. Norman flagged Canada-US trade tensions and Middle East-driven oil prices as key risks.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
