Fixed mortgage rates could rise in 2027, Moody’s says

Fixed mortgage rates could rise in 2027 even if the Bank of Canada keeps its policy rate steady through most of the year, according to a new outlook from Moody’s Analytics.

In the report, published by RPS Real Property Solutions, Moody’s said demand for financing from governments and companies investing in artificial intelligence is pushing bond yields higher. The report says “mortgage rates are likely to follow.” Bond yields are a key benchmark for lenders when pricing fixed mortgages.

Moody’s said demand for financing from governments and companies investing in artificial intelligence is pushing bond yields higher. The report says “mortgage rates are likely to follow.” Bond yields are a key benchmark for lenders when pricing fixed mortgages.

Moody’s expects higher borrowing costs to weigh on housing demand after the market lost momentum in the third quarter. National home resales fell 2.3% from August to September, the report noted. The RPS House Price Index ended the quarter down 1.1% from a year earlier.

Home prices forecast to recover slowly

Moody’s has lowered its home price forecast but still expects prices to rise in 2027, calling the recovery “slow and modest.” It expects hiring to pick up after a weak start to the year. A further slowdown in homebuilding could also help support prices by limiting new supply, the report said.

Moody’s expects Ontario and B.C. to lag, particularly Toronto and Vancouver, where poor affordability and weak demand are likely to limit price gains. Quebec and parts of the Prairies are projected to fare better.

The forecast assumes the federal foreign-buyer ban expires at the start of 2027. Budget 2026 proposes extending it for existing homes while exempting new builds. Moody’s expects the ban’s expiry would have only a modest effect on prices even in major cities, given foreign buyers’ historically small share of purchases.

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Last modified: November 10, 2026