National Bank Economist: Home Prices Could Stabilize in 2027, and Borrowers Are Choosing Shorter Terms

What National Bank is forecasting

Speaking at Mortgage Professionals Canada’s National Mortgage Conference in Calgary, National Bank chief economist and strategist Stéfane Marion said Canadian home prices could begin stabilizing in 2027, according to Canadian Mortgage Trends.

He expects that follows a decline of roughly 4% in the national composite price index this year. His reasoning, as reported, is that construction costs are unlikely to fall much even if demand stays weak, which limits how far prices can drop. He also said the federal government’s plans to speed up infrastructure and industrial projects could compete for construction workers and keep building costs firm.

He was explicit about the limits. As Canadians aged 55 and over make up a growing share of the population, he said housing turnover could stay below historical levels, making a return to more than 40,000 sales a month unlikely. And on affordability, he said: “I can’t restore affordability anymore via price declines,” adding that the best hope is higher income.

The market is regional, and Ontario is soft

Marion said there is no such thing as a national market for housing. Population growth, he said, has slowed from roughly 1.2 million people a year a few years ago to about 200,000, and to virtually zero in Ontario, Quebec and British Columbia. The slowdown was sharpest among people aged 25 to 54, the group most likely to be buying.

He pointed to Hamilton, where prices have fallen about 23% from their 2022 peak, and said Toronto and Vancouver have also been disproportionately affected by changes in immigration policy. Uncertainty over U.S. tariffs, he added, weighs on manufacturing-dependent regions where households worry about job security.

For readers in Waterloo Region, London and the surrounding areas, that is a reminder that local conditions matter more than a national average. Our Waterloo Region and London pages track what the local boards are reporting.

The shift to shorter terms

The detail with the most practical weight is this: Marion said five-year mortgages now account for less than 20% of outstanding mortgages, the lowest share he has seen in his career. He attributed it to Canadians’ growing sensitivity to higher borrowing costs.

It fits a pattern we have covered. We looked at why more borrowers are choosing variable earlier this year, and the fixed versus variable choice in October. A shorter term or an adjustable one is a bet on flexibility, and it comes with a trade-off.

• More renewal decisions. A three-year or shorter term brings you back to the table sooner, and each renewal is a new set of market conditions.
• More exposure to timing. The pricing available on your date is what you get, which is why starting early matters.
• More chances to restructure. A shorter term also means fewer years locked into a structure that no longer fits your life.

Neither choice is right for everyone. Which one fits depends on how much payment movement your budget can absorb, how long you expect to stay in the home, and what a penalty would cost if you left early.

What to do with this

If you are choosing a term now, run the numbers for more than one scenario. Our calculators show the payment under different terms and amortizations using the Canadian semi-annual method for fixed terms.

If your term is ending, our renewal page explains what changes if you stay or move. And if you want someone watching the market for you between renewals, Rate Tracker Pro does that. Illustrative only and subject to lender approval and final terms.