The Bank of Canada is re-evaluating how it measures inflation, and while that might sound like an economics problem, it has a very real effect on the housing market.
Because when the Bank changes the way it measures inflation, it can directly influence how soon interest rates fall… and that affects everything from mortgage payments to home prices.
Why the Bank of Canada Is Changing Its Playbook
For years, the Bank of Canada (BoC) has relied on two main “core inflation” measures, CPI-trim and CPI-median — to decide when to raise or cut interest rates.
But in today’s unpredictable economy, those measures aren’t telling the full story. Deputy Governor Rhys Mendes recently said the BoC is reviewing how it assesses inflation before its 2026 policy renewal.
Translation: the Bank wants a clearer, more flexible way to track inflation that reflects how Canadians actually live, and spend – in a post-pandemic economy.
That’s a big deal for anyone involved in real estate. Because inflation is the main factor behind the BoC’s rate decisions, this review could reshape the pace of rate cuts and buyer confidence in the market.
Inflation Confusion = Interest Rate Uncertainty
Right now, some inflation measures show prices cooling toward 2.5%, while others still hover near 3%. That half-point difference might not seem like much, but for the Bank of Canada, it’s huge.
If they believe inflation is truly easing, we could see more rate cuts, and that means:
- Lower mortgage rates
- Higher buyer activity
- Stronger demand for listings
But if the data is unclear, the Bank might stay cautious and hold rates higher for longer — delaying relief for borrowers and keeping the real estate market in a slower gear.
Economists Are Split, and So Are Buyers
Some experts think the BoC’s new approach will help create a clearer picture of where prices are headed. Others warn that using too many inflation indicators could confuse the public and slow decision-making even more.
For homeowners and investors, that uncertainty is the tricky part. The housing market thrives on confidence, and when buyers aren’t sure if rates are going up or down, many just wait.
That “wait and see” mentality is exactly what’s been cooling demand across much of B.C. and Canada.
What This Means for Buyers and Sellers
For buyers, the Bank’s shift could signal that we’re getting closer to a period of rate stability, meaning it might soon be safer to lock in a mortgage or make a move.
For sellers, this transition period can be a window of opportunity. As rates eventually ease, demand often rebounds fast, especially for well-priced homes in family-friendly areas like Abbotsford, Langley, and Chilliwack.
If inflation proves to be lower than the Bank expects, we could see more buyers jump back into the market by mid-2025.
The Bigger Picture
At the end of the day, inflation isn’t just an abstract number – it shapes the cost of borrowing, the confidence of buyers, and the speed of the housing market’s recovery.
The Bank of Canada’s move to modernize its inflation tools is a reminder that the next few years will bring change, and opportunity – for those who stay informed and ready to act.
As always, if you’re considering buying or selling a home in Abbotsford, feel free to reach out.
We’re here to help you understand how new mortgage rules and Bank of Canada decisions impact your real estate goals — and guide you through your next move with confidence:
primepropertygroup.ca