What has Happened in the 2025 Mortgage Market So Far, and How to Prepare for 2026

The Canadian mortgage market in 2025 has marked a clear shift from volatility to stabilization. After several years of rapid interest rate changes, borrowers across Canada and particularly in Surrey and Abbotsford, BC have entered a more predictable but still challenging mortgage environment. Understanding what has happened so far in 2025 is essential to preparing effectively for 2026.

What Changed in the 2025 Mortgage Market?

Interest Rates in 2025: Stabilization, not a Return to Lows

Mortgage rates in 2025 continued to be higher than the extremely low levels observed during the pandemic years, indicating a post-inflation reset as opposed to a catastrophe.

As lenders fought for market share, 5-year fixed mortgage rates averaged between 4.0% and 4.5% during 2025, with mid-year pricing frequently closer to 4.0%–4.1%.
Variable mortgage rates dropped toward about 4.0%, helped by Bank of Canada policy easing and prime rate reductions.
By late 2025, the Bank of Canada policy rate was expected to remain close to 2.25%, which would assist stabilize borrowing costs.

These rates were still significantly higher than the sub-3% levels that many homeowners had been accustomed to before to 2022, even though they were an improvement over previous times when mortgage rates exceeded 5%.

Impact on Surrey and Abbotsford Homeowners

The largest issue facing Surrey and Abbotsford homeowners in 2025 was the mortgage renewal gap. When their mortgages were renewed in mid- to late-2025, borrowers who obtained mortgages with interest rates below 3% between 2020 and 2022 frequently had to make much larger payments.

Consequently:

The need for reliable local mortgage brokers to negotiate conditions and handle payment shock increased.
Renewal planning became more deliberate.
And refinancing conversations rose.

Mortgage Rate Outlook and Schedule for 2026

When is the next Rate Announcement?

The next Bank of Canada interest rate announcement is scheduled for Wednesday, January 28, 2026. This will be the first announcement of the year.

What Experts Expect in 2026

According to market projections, 2026 will be a year of transition rather than a significant turning point. It is anticipated that changes in mortgage rates would be gradual rather than abrupt.

Barring significant changes in the economy, the Bank of Canada policy rate is anticipated to continue fixed at 2.25% through 2026.
The prime rate is anticipated to remain comparatively constant with little room for change later in the year.

Projected Mortgage Rate Schedule for 2026

Period	5-Year Fixed (Approx.)	Variable (Approx.)
Early 2026	4.0%–4.3%	3.8%–4.0%
Mid 2026	4.1%–4.4%	3.8%–4.0%
Late 2026	4.2%–4.5%	3.8%–4.1%

These ranges are a reflection of Bank of Canada policy signals, anticipated bond yields, and forward-looking lender pricing. This provides stability for borrowers, but there will still be challenges with affordability.

How to Prepare for 2026: Practical Advice for Borrowers

Start Renewal Planning Early

Make plans six to twelve months ahead of time if your mortgage renews in 2026. In the competitive home markets of Surrey and Abbotsford, early planning is crucial since it enables you to compare lenders, lock in rates, and strategically manage payments.

Use Refinancing Strategically

In the current market, refinancing is more about enhancing overall financial stability than it is about finding the best rate. Refinancing is often used by homeowners to:

Consolidate high-interest debt.
Increase monthly cash flow.
And access home equity for investments or upgrades.
Focus on Strategy, Not Headlines

It is rarely successful to try to time the market. The most prosperous borrowers in 2026 will prioritize risk tolerance, long-term affordability, and customized mortgage arrangements – often under the direction of a local mortgage expert.

Final Thoughts

Clarity, but not simplicity, has been brought about by the 2025 mortgage market. Although rates have stabilized, there are still issues with affordability, particularly for homeowners who are renewing. Preparation, early planning, and professional advice will be crucial in 2026.

Working with a knowledgeable local mortgage broker can help homeowners and purchasers in Surrey and Abbotsford make the difference between comfortably planning for the future and responding to changes in the market.