How the Bank of Canada’s Rate Hold—and Global Events—Could Shape Your Spring Real Estate Plans

The BoC held its policy rate at 2.25% this week, which didn’t surprise most observers. The BoC may have its hands tied, given the ongoing impacts of the war in Iran. Notably, the word ‘uncertain’ was repeated in the press release, on average, every 128 words. Let’s take a closer look at what’s fueling this concern.

The closure of the Strait of Hormuz is expected to send shockwaves through global markets. About 20 million barrels of oil per day—roughly 20% of global consumption—usually pass through this critical chokepoint, which handles nearly a quarter of the world’s seaborne oil trade. As oil prices rise, so does inflation. We see this not just at the gas pump, but in the broader cost of goods and services, as higher transportation and energy expenses ripple through the economy.

Canadian inflation has been trending downward, with February’s rate at just 1.8%—well below the Bank’s target. The labour market is also showing signs of slack, as unemployment rose to 6.7% in February. With the population shrinking for a second consecutive quarter and real GDP contracting by 0.2% in Q4 2025, the economy looks weaker. These factors give the Bank of Canada some leeway to lower rates, but concerns about future inflation likely mean rate cuts will remain on hold for now.

For now, the Government of Canada’s 5-year bond rate may do some of the BoC’s work. Bond yields reflect market expectations for inflation and growth, and Canadian 5-year fixed mortgage rates are closely tied to the 5-year government bond yield—typically 1% to 3% higher. In March, the 5-year bond yield jumped nearly 35 basis points.

Home sellers and buyers are heading into a Spring Market facing higher rates and plenty of uncertainty. Unless something changes, I expect this to keep a lid on what’s already a subdued real estate market this spring. I’ll be watching the trends closely and will keep you updated as the situation evolves.