Steady Rates, Strong Employment: The Foundation for a Better 2026

December 10, 2025

Bank of Canada Update — December 2025

Stability Today, Opportunity Ahead

The Bank of Canada held the prime rate at 4.45% today, surprising many who were expecting a small rate cut. The deciding factor? Stronger than expected employment numbers. When the labour market shows resilience, the Bank tends to stay put. More Canadians working means more income stability, which supports consumer spending and, eventually, housing demand.

This isn’t bad news. In fact, strong employment is one of the most encouraging signals we’ve had all year. It suggests that once the dust settles on inflation and global trade uncertainty, the real estate market has the foundation it needs for a healthier 2026.

Here is an outline of today’s press release and our interpretation of what this means for mortgage rates.

The Rate Is “Just Right”… For Now

The Bank continues to signal that inflation is under control. Headline CPI sits just above 2%, and core inflation remains between 2.5% and 3%. For the first time in several years, the overnight rate is sitting at the bottom end of the Bank’s neutral range, where policy isn’t stimulating or restricting the economy.

In their words, the current rate is “about right” for where Canada sits today.

That said, they’re not declaring they are done with future rate drops. Though the economy is stable, it’s not strong enough to remove all uncertainty. Because of that, the Bank remains ready to react if the outlook deteriorates.

What’s Going To Happen in January?

If economic conditions remain as they are, with steady inflation, solid employment, and modest growth, we don’t expect that we’ll see a rate cut in January.

Where a potential 2026 cut could come into play is through trade policy. Negotiations around the U.S.–Mexico–Canada Agreement (USMCA) are the key economic event of the year. If the agreement is significantly redrawn or if the U.S. signals intent to withdraw, Canada’s export sector would take a hit. And that kind of shock could push the Bank toward easing sooner.

Weak Real Estate, Strong Stock Market — Why Confidence Is Holding Up

It’s no secret that the North Vancouver and Vancouver real estate market has felt soft this year—sales are slow, price growth has stalled, and many homeowners feel like they’re in a holding pattern.

But consumer confidence hasn’t fallen the way you might expect. If you’ve been to Park Royal recently, you’ll know what I mean. You spend more time looking for parking than in the store. 

Why is that?

Because the bond market has been remarkably calm, and when bonds are quiet, stock markets tend to perform very well. Over the last two years, portfolios have grown significantly. This has created an unusual but reassuring balance:

• Housing wealth feels stagnant
• Investment wealth feels strong

For many households, the strength in their investment accounts offsets the lack of momentum in real estate. It’s one of the reasons spending has held up and why consumer confidence, while cautious, is far from pessimistic.

A calm bond market doesn’t just help stocks. It also supports rate stability, creating a more predictable environment for homeowners and buyers navigating mortgages. All of which sets the stage for a stronger real estate market in North Vancouver / Vancouver for 2026.

The Bottom Line for Buyers and Homeowners

• Rates held because employment is strong—and that strength ultimately supports long-term housing demand.
• Inflation is under control, giving the Bank confidence to stay neutral.
• No January cut expected, unless USMCA negotiations create economic turbulence.
• Another 25 bps cut is still on the table for 2026, depending on how trade and growth evolve.
• A strong stock market is balancing out weak real estate, helping keep consumer confidence stable.
• The foundation for a better 2026 housing market is building, even if the finish line isn’t here yet.

For first-time buyers and move-up buyers, the takeaway is simple:
Stability is returning. Rates aren’t falling yet, but the volatility of the past two years has cooled—and that alone is a meaningful shift.

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The next Bank of Canada meeting is January 28, 2026

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Disclaimer Notice: The views expressed in this blog post are based on our opinion. The information has been sourced from the Bank of Canada and several Canadian news sources. Any forecasts or expectations of the direction of interest rates are based on the collective experience of the Nishka Riley Mortgage Team, and as such, any recommendations must be taken within the context of your personal situation. As with any forecast, there is no way to guarantee the outcome of the real estate market or interest rates, nor is a guarantee implied.