Mortgage Payment Calculator Canada

December 2025: Mortgage market update

2025 has been a relatively slow year for the Canadian housing market, with buyers hunkered down due to the uncertainty over new U.S. tariff threats. If you’re looking for a mortgage rate in Canada, read on for some key information.

• CPI update: Statistics Canada reported that the inflation increased 2.4% year over year in December, up from 2.2% in November. The rise was driven primarily by the removal of last year’s GST/HST tax relief from the annual comparison, which lifted year-over-year prices for certain goods and services that had been temporarily exempt. That upward pressure was partly offset by falling energy prices. Gasoline prices declined 13.8% compared with a year earlier, a steeper drop than in November. Excluding gasoline, inflation rose to 3.0%, up from 2.6%, indicating that much of the increase was concentrated in categories affected by the tax relief ending. Food costs remained one of the most noticeable pressure points for households. Grocery prices rose 5.0% year over year, and restaurant prices climbed 8.5% annually. Housing-related costs showed signs of easing as overall shelter inflation increased just 0.1% on a monthly basis. Mortgage interest costs rose 1.7% year over year, extending a prolonged deceleration as earlier Bank of Canada rate cuts and holds continue to work through to borrowing costs. Rent inflation remained elevated at 4.7%, reflecting ongoing tight conditions in rental markets across Canada. Beneath the headline number, core inflation continued to improve. The CPI Median eased to 2.5%, while the CPI Trim declined to 2.7%, suggesting underlying price pressures are continuing to cool. Overall, the December CPI report supports expectations that the Bank of Canada is likely to maintain its current interest rate stance in the near term.
  
• Real estate update: Canada’s housing market brought 2025 to a close with softer momentum, as activity slowed heading into December. According to the Canadian Real Estate Association (CREA), 26,077 homes were sold nationwide in the final month of the year, down 2.7% from November and 4.5% from December 2024. That slowdown capped a largely steady year, with 470,314 homes sold in 2025, a 1.9% decline year over year, as economic uncertainty continued to weigh on buyer confidence despite falling interest rates and new housing policy measures. Market conditions remained balanced at year-end. Active listings climbed to 133,495 by year-end, up 7.4% compared to a year earlier, while both sales and new listings cooled into the holiday period. The national sales-to-new-listings ratio (SNLR) edged slightly lower to 52.3%, from 52.7% in November, remaining comfortably within CREA’s 45%–65% balanced-market range. With supply and demand broadly aligned, price growth stayed muted. The national average home price came in at $673,335, down 0.1% year over year, while the MLS® Home Price Index slipped 0.3% month over month and 4.0% annually. CREA noted that late-year price softness likely reflected seasonal seller adjustments rather than a meaningful shift in underlying market fundamentals.

Highlights from the Bank of Canada’s December 10, 2025 announcement

The Bank of Canada ended the year by keeping its overnight lending rate at 2.25%, signalling a shift towards rate stability. 

• In total, the Bank has trimmed its benchmark rate by 275 basis points since mid-2024, including two reductions in September and October that brought the rate into its current range. This level — the lowest since early 2022 — reflects the central bank’s assessment that policy has now returned to a neutral stance after an extended series of cuts.
• The decision was expected as recent economic data has shown surprising strength. Canada added 54,000 jobs in November, pushing the unemployment rate down to 6.5%, while third-quarter GDP expanded 2.6%, countering earlier recession forecasts. Inflation continues to move in the right direction, with October CPI landing at 2.2%, and core measures pointing to broad cooling. Taken together, these indicators support the Bank’s view that holding rates steady is appropriate in the near term.
• Variable-rate mortgage holders will see no change to their interest costs, with the prime rate holding at 4.45% and the lowest available five-year variable rate remaining at 3.45%. Those shopping for a mortgage may want to secure a rate hold, as lenders could narrow discounts even without changes to the prime rate.
• Fixed mortgage rates are trending upward, driven by rising Government of Canada bond yields. Stronger-than-expected economic readings have pushed yields higher in recent weeks, prompting lenders to increase fixed mortgage pricing by roughly 20 basis points. The lowest five-year fixed rate now sits around 3.89%; however, borrowers already in a fixed term remain protected until their renewal date.
• Looking forward, the Bank reiterated that it is prepared to adjust policy if inflation starts to climb or if new trade disruptions weaken economic activity. Still, financial markets largely expect rates to remain stable through early 2026, with only a modest possibility of a future hike should price pressures re-emerge.
  

  Read more: Bank of Canada holds target interest rate at 2.25% in December 2025 announcement

Canadian housing market forecast for 2026

Canada’s housing market is expected to regain traction in 2026 as improving borrowing conditions and pent-up demand begin to lift activity, according to CREA. While market conditions softened at points in 2025, home sales had still rebounded by 12% by August, setting the stage for further gains this year. CREA expects lower interest rates and a growing pool of sidelined buyers to support a broader recovery, particularly among first-time buyers who have been largely shut out of the market in recent years. National home sales are forecast to rise 5.1% in 2026, reaching approximately 494,500 transactions. British Columbia and Ontario are expected to see the strongest rebound, with sales projected to increase by about 8%, reflecting improved inventory levels and stronger buyer interest. In contrast, regions that maintained steadier demand through 2025 are expected to experience more modest growth this year. Home prices are also forecast to edge higher, though gains are expected to remain relatively subdued. CREA projects the national average home price will increase 2.8% to $698,881 in 2026, with price growth remaining constrained in higher-cost markets such as Ontario and B.C., as well as in Alberta and Nova Scotia, where sales have cooled. Saskatchewan, Quebec, and Newfoundland and Labrador are expected to continue seeing price increases, although slower population growth is likely to moderate those gains. Looking ahead, CREA anticipates the recovery will extend into 2027, with sales rising another 3.5% and the national average price increasing 2.3% to $714,991 — keeping prices near the $700,000 mark for a seventh straight year.

Why use a mortgage payment calculator?

When planning to buy a home, it's easy to focus on the final purchase price or your mortgage amount. But actually, the most relevant number to you will be your regular repayment. After all, your mortgage payments are the amount that you'll need to take from your paycheque each month.

What is a mortgage payment?

Your mortgage payment is the amount of money you must pay every month to pay down, and ultimately pay off, your mortgage loan. Your mortgage payment covers both the principal (the actual amount of the loan) and the interest on the loan. It can also include mortgage default insurance, also sometimes known as CMHC insurance (required when your down payment is less than 20% of the cost of your home), property taxes and other fees. When you first begin making payments, more of it goes towards covering interest, but over time, more of your payment will eventually go to paying down your mortgage balance.

Tip for first-time home buyers: GST exemption

Under Prime Minister Mark Carney’s GST exemption proposal, first-time home buyers could save up to $50,000 if they buy a $1-million newly-built home or a substantially renovated property. The Conservative Party has proposed a similar plan, which would apply to homes priced up to $1.3 million and wouldn’t be limited to first-time buyers.

The final form of this policy hinges on the outcome of the Federal Election on April 28, 2025, leaving some details in flux. 

Also read: Federal Liberals and Conservatives vow to remove GST on new home purchases

How do I get approved for a mortgage?

When thinking about your monthly mortgage payments, it’s also important to consider what you’ll need in order to get approved for a mortgage. Here are some of the most important things that prospective lenders will want to see: 

• A good credit score: You need a credit score of 680 or higher to qualify for the best mortgage rates that allow for the lowest monthly mortgage payments. To qualify for any mortgage at all, you’ll need a credit score of at least 560. Read more on how your credit score affects your ability to get approved for a mortgage.
• Proof of income: You’ll need to provide proof of income in the form of pay stubs and/or tax documents like your Notice of Assessment (NOA). If you recently started a new job, even with proof of income, many lenders will want to see that you’ve held the position for at least a year. 
• Ability to pass a mortgage stress test: You will need to pass a mortgage stress test, which ensures that you can still afford your mortgage payments at a rate known as the “qualifying rate”, set by the Office of the Superintendent of Financial Institutions (OSFI), or your contract rate + 2%, whichever is the higher of the two. 
• Down payment: The size of your down payment affects the house you can afford as well as the size of your mortgage and associated monthly payments. As well, it affects whether you will need to purchase mortgage default insurance, which is required if your down payment is less than 20% of the value of the home you are purchasing. The minimum down payment you’ll need to have depends on the home you’re looking to buy:

More mortgage calculators

For further information, check out these helpful pages!

• Best Mortgage Rates in Canada
• Variable or Fixed Mortgage Rates
• Amortization
• Mortgage Default Insurance (CMHC Insurance)
• Open vs. Closed Mortgage: What's the Difference?
• Mortgage Terms Glossary 
• Mortgages