Rising Mortgage Rates in 2023 Challenge Canada’s Housing Market


The Canadian housing market, known for its resilience and dynamic growth, is facing new challenges. Let’s delve deep into the factors influencing the market, the potential implications, and what experts are predicting for the future.

Weakening Sales Amidst Surging New Listings

September witnessed a significant weakening of sales in the major markets. This downturn coincided with a surge in new listings, pointing towards softer demand. A critical observation to make here is the shift in demand-supply dynamics.

Rising Mortgage Rates: A Challenge Ahead

With the Canadian government bond yields witnessing a sharp rise, there’s an anticipated impact on the housing market. Specifically, the five-year bond yields hit 4.4%, hinting at a possible rise in the lowest available five-year fixed mortgage rate, taking it to 6.25%. This 150-basis point increase since April represents a notable 13% hit to housing affordability.

The Imminent Price Outlook

Experts predict a challenging road ahead for Canada’s housing market. There’s an expectation for home prices to stagnate in the upcoming six months. However, given the recent market developments, a decline seems more plausible. Leading institutions like Toronto-Dominion Bank forecast a “more pronounced and extended downturn,” especially with the backdrop of rising bond yields.

Anticipated Declines

Industry insights suggest a potential decline in both home sales and prices towards the end of this year and stretching into 2024. By the onset of next year, we might witness a dip of 8% in home sales and a 6% decline in prices.

A Glimmer of Hope: Mortgage Relief

There’s a possibility of experiencing some mortgage relief. Should the Canadian bond yields decrease towards this year’s end, owing to a softer economy, there could be a silver lining for potential homebuyers and investors.

Recovery Projections

Recovery in the housing market is anticipated to be a gradual process. Predictions indicate that it might not be until 2025 that Canadian home sales bounce back to sustainably exceed their levels before the pandemic.

September’s Economic Snapshot

A ray of hope amidst the housing market’s challenges is the economy’s performance in September. The addition of 64,000 jobs and a stable unemployment rate of 5.5% offers some solace. However, all eyes are now on the Bank of Canada, as their decision on another rate hike remains contingent on various economic indicators.


1. Why have home sales weakened in recent months? Sales have weakened due to a combination of factors such as rising mortgage rates, increased new listings, and softer demand.

2. What might the future of mortgage rates look like given the current trends? With the significant rise in the Canadian government bond yields, there’s a potential for the five-year fixed mortgage rate to go up to 6.25%. However, any relief would depend on these bond yields decreasing by this year’s end.

3. When can we expect a full recovery in the Canadian housing market? Current projections suggest a slow recovery, with Canadian home sales potentially surpassing their pre-pandemic levels sustainably by 2025.


Navigating the complex terrain of Canada’s housing market requires expertise, insight, and a trusted partner. At Remax Success, we pride ourselves on being that partner for countless individuals and families. If you’re considering entering the market, looking to sell, or simply seeking guidance on the evolving landscape, our team is here to support and guide you every step of the way. Contact Remax Success today and secure your successful tomorrow in the Canadian housing landscape.

Share this post with your friends

Leave a Reply

Your email address will not be published. Required fields are marked *