Bank of Canada Market Participants Survey—Fourth Quarter of 2024 was just released and reveals cautious optimism for 2025-2026, with implications for mortgage rates, housing markets, and economic stability. Here are three critical takeaways for Alberta’s borrowers and real estate professionals:
1. Interest Rate Cuts Ahead: Relief for Borrowers
The median forecast shows the Bank of Canada’s policy rate declining to 2.50% by December 2025 (from 3.00% in January 2025), with 50% of respondents seeing risks skewed to even lower rates. This signals:
- Potential savings for variable-rate mortgage holders
- Improved affordability for first-time buyers
- Opportunities for refinancing/renewals as fixed mortgage rates follow bond yields downward (5-year bond yield median: 2.88% by end-2025)1
2. Housing Market Resilience Meets Economic Caution
While 82% of respondents flagged a stronger housing market as a key upside risk, the outlook remains tempered:
- 85% believe Canada’s GDP currently lags potential output, suggesting room for recovery
- Median GDP growth forecasts: 1.8% (2025) and 1.9% (2026)
- 30% probability of recession in next 6-12 months
Implication for Realtors: Prepare clients for competitive markets but emphasize stress-test readiness given lingering economic risks.
3. Inflation Stability Supports Predictable Mortgage Planning
Survey respondents forecast 2.0% CPI inflation through 2026, with:
- 71-76% probability inflation stays within BoC’s 1-3% target range
- Only 3% chance of >4% inflation by 2026
This stability suggests:
- Reduced likelihood of sudden rate spikes
- Improved long-term budgeting for fixed-rate mortgages
- Renewed focus on credit improvement strategies as qualifying thresholds stabilize
Wrap-Up: Strategic Opportunities
While geopolitical risks (50% of respondents) and fiscal tightening (43%) remain concerns, the data suggests a favorable window for:
- First-time buyers to lock in lower rates
- Investors to explore commercial mortgage options
- Realtors to educate clients on rate-cut timing and recession preparedness
Disclaimer: This article is for informational purposes only and not financial, legal, or investment advice. Consult a licensed mortgage professional, financial advisor, or real estate expert for personalized guidance before making decisions. All projections and forecasts are subject to change based on evolving market conditions.
Source: https://www.bankofcanada.ca/2025/02/market-participants-survey-fourth-quarter-of-2024
