Real estate professionals are looking to later this year for a potential change in interest rates after the Bank of Canada held its policy rate steady, leaving borrowing costs in place for a fourth straight decision.
The central bank said Wednesday it will keep the target for the overnight rate at 2.25%, where it has stood for several months. “We’ve held the policy rate at this level since October,” Bank of Canada Governor Tiff Macklem said in prepared remarks.
Real estate executives said the decision came as no surprise, with inflation and geopolitical risk still limiting the Bank’s ability to shift policy, and they are already watching for indications of a change later in the year.
“With inflation pressures resurfacing, the Bank has little room to lower interest rates, and the next move could be upward,” Royal LePage President and CEO Phil Soper said in an email to CoStar News. He added that buyers planning to enter the market this year may want to secure financing sooner because rate holds “have a limited shelf life.”
Other real estate leaders said the pause continues to delay relief for borrowers, but it has not stopped activity.
“It is no surprise that the Bank of Canada continues to hold the overnight rate,” Avison Young Canada President Mark Fieder said in an email. “While we would prefer to see a cut to stimulate commercial real estate investment activity, we are watching whether the BoC raises rates later this year. Despite the paused rates, we are seeing activity in the office sector, particularly in investment and leasing."
Keith Reading, Morguard’s senior director of research, said he also expected the Bank to hold, citing uncertainty on multiple fronts. Reading said questions remain around whether the Canada‑United States‑Mexico trade agreement would be extended, but he pointed to the war in the Middle East as the larger variable.
US-Iranian conflict could trigger recession
The U.S. war with Iran could trigger a recession, he said, as a bottleneck in oil tankers at the Strait of Hormuz disrupts the economy further as time passes.
A deep distruption would be damaging for Canada’s office sector, Reading said.
“Investors and businesses don’t like this kind of environment, and it’ll have a significant impact on offices,” Reading said. “If you’re a business thinking about expanding your office footprint, you don’t know where your revenues are going, so you hold off. Lenders will also become nervous about lending on office.”
The multifamily sector is better positioned to withstand a deep downturn, Reading said, noting that housing demand tends to hold up better.
“During past recessions, fewer people purchased homes because they’re concerned about their jobs and put plans on hold,” he said. “Long term, rental apartments will be just fine. Eventually immigration returns, and there’s plenty of financing available for rental construction through" the Canadian Mortgage and Housing Corp.
The bank said the country's economic outlook has not materially changed. After contracting late last year, growth resumed in early 2026, supported by consumer and government spending. Housing activity and business investment remain under pressure. Markets remain sensitive to geopolitical developments, while the Canada‑U.S. dollar exchange rate has remained stable.
Inflation rose to 2.4% in March and is expected to increase again in April due to higher gasoline prices, and the central bank said it is watching whether energy costs force up prices of other items and goods.
“It is no surprise that the Bank of Canada held the rate at 2.25%,” CoStar analyst Mitch Strohminger said in an interview. “Inflation remains sticky, and the conflict in the Middle East could create short‑term price pressure. The base case is that the Bank stays on hold until it sees clearer signals in either direction.”