RBC flags a “fragmented” recovery where mortgage relief still leaves many households behind
Canada’s economy entered 2026 in better shape than many have feared, but mortgage affordability remains a fault line running through that recovery, according to a new RBC Economics outlook.
The bank’s “Beyond the forecast” analysis argued that resilience at the macro level has obscured how uneven the cost‑of‑living crisis felt on the ground for borrowers.
RBC said the past year confounded predictions of a deep downturn. There were no two consecutive quarters of negative GDP, jobs continued to be added and “household balance sheets improved over the course of the year.”
Still, the report stressed that “there are many Canadians who will feel the concept of resilience is a poor description of the economies they experience,” as the country split into “trade‑hit and trade‑insulated regions.”
“Canada’s affordability crisis is hurting some much more than others,” the analysis said, pointing to essentials.
Since early 2020, prices in the Consumer Price Index have risen about 20%, “below wage increases of 25% over the same period—suggesting some real income growth.”
But RBC noted that “prices for essentials including food and housing have grown much faster, both at about 30%, well outpacing wage growth.”
Affordability pressures for homeowners
RBC observed that the Bank of Canada cut rates four times in 2025, for a total of 275 basis points since 2024, which “helped reduce the mortgage refinancing shock for homeowners, and debt burdens of many Canadians.”
Separate RBC housing work showed its national aggregate affordability measure improved to roughly the mid‑50% range by late 2025, down from a pandemic‑era peak of 63.5%, but warned the latest gains were “the slimmest this cycle” as mortgage‑rate declines slowed.
Regional strains, uneven relief
RBC’s 2026 themes placed affordability alongside trade, demographics and regional fragmentation.
Ontario and Quebec, more exposed to US trade frictions, face weaker job prospects, while resource‑rich Alberta and Saskatchewan are “largely insulated from trade conflict” and expect to outgrow the national average.
Sal Guatieri, senior economist and director economics at BMO Capital Markets previously said that home‑price risks “remain contained to Ontario and British Columbia, where affordability (though improving) remains poor.”
What it meant for mortgage professionals
Looking ahead, RBC expects inflation to hover just above 2%, with lower policy rates and moderating price growth in Ontario and British Columbia offering some relief.
However, the bank warned that “structural affordability challenges remain at the forefront,” citing “persistently elevated house prices” and weaker prospects for groups more exposed to emerging technologies.
Even as refinancing shocks eased and national indicators stabilized, affordability in 2026 remains a client‑by‑client story shaped by region, debt load and income trajectory, not by headline growth alone.
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