Desjardins Says Bank of Canada Has to Pay More Attention to What's Happening in Housing

12:28 PM EDT, 03/17/2026 (MT Newswires) -- The Bank of Canada has largely sidestepped any detailed discussion of residential real estate, characterizing the housing market as simply subdued and uneven across regions, said Desjardins.

But the data in several of Canada's largest cities are clearly deteriorating, and higher oil prices risk compounding those pressures, noted the bank.

While higher oil prices will support growth in Alberta, Saskatchewan, and Newfoundland and Labrador, they will weigh on activity in provinces such as British Columbia, Ontario and Quebec, stated Desjardins.

Housing markets in Montreal, Saskatoon, Regina and St. John's have proven resilient and aren't in need of support. Calgary and Edmonton have softened more recently and will welcome any lift from a stronger resource sector. But the areas most in need of support lie elsewhere. Housing markets in Toronto, Vancouver and many surrounding regions are firmly in recession.

Rising oil prices, which could push benchmark interest rates higher, could amplify those headwinds, pointed out the bank. Mortgage rates are set to increase just as a tidal wave of homeowners face renewal.

The most vulnerable are those with variable-rate, fixed-payment mortgages, some of whom could see payment increases of 70% or more, added Desjardins. While the share of residential mortgages in arrears is just slightly above the pre-COVID average, the numbers have been trending consistently higher. In Ontario, arrears rates haven't been this high since early 2012, and the province now accounts for more than half of all arrears.

Home prices in Ontario and B.C. are significantly below their peaks. Given their weight in the national housing market statistics, the extremely weak provincial conditions show up prominently in the Canada-wide numbers.

On their own, housing market strains could argue for additional monetary stimulus, causing markets to at least rethink the likelihood of rate hikes before year-end, according to the bank. But policymakers may again downplay housing risks in hopes that spring tailwinds will lift the hardest-hit markets.

Finally, Governor Tiff Macklem has described the evolving trade relationship with the United States as a structural change that may lower the potential growth rate of the economy. If Canada is undergoing such a structural shift, then the neutral rate of interest may ultimately be lower than the BoC's current estimate.

In contrast to the central bank's recent claim, that would mean that the current policy rate setting isn't stimulative at all. But since policymakers won't revisit their neutral rate estimate until April, expect them to dodge questions on that topic too, added Desjardins.

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