Canadian Real Estate Market Update 2026: Interest Rates, Investment Strategies & Financing Options

In this episode of the Wisdom Lifestyle Money Show, host Scott Dillingham delivers a comprehensive Canadian real estate market update for 2026, providing investors with actionable insights on interest rates, financing strategies, and investment opportunities. Scott, who recently appeared on Erwin Szeto's The Truth About Real Estate Investing podcast, shares his expert perspective on where the market is headed and why now may be the optimal time to invest.

With the Bank of Canada holding rates at 2.25% following aggressive cuts in 2024-2025, Scott explains why we've likely reached the bottom of the interest rate cycle. Most major banks predict rates will stay flat through 2026, with some forecasting slight increases by year-end. For investors who've been waiting on the sidelines, this signals a critical window of opportunity before increased competition drives prices higher.

Scott addresses the current buyer's market conditions across Canada, noting that buyers currently have negotiating power and are securing discounts. However, he predicts this will shift as more buyers enter the market once they realize rates won't drop significantly further. The historical pattern shows that when investors and homeowners flood back to the market, bidding wars return and prices rise.

For Canadians investing in US real estate, Scott highlights the recent announcement of $200 billion in Fannie Mae and Freddie Mac bonds, which will lower owner-occupied mortgage rates south of the border. He encourages investors to evaluate opportunities across both countries objectively, removing political considerations from investment decisions and focusing purely on the numbers.

The episode dives deep into three key investment strategies gaining momentum: ADU (Accessory Dwelling Unit) construction, CMHC MLI Select multifamily financing, and commercial mortgages as an alternative to B lending. Scott explains how adding secondary suites or garden suites can transform non-cashflowing properties into profitable investments, with cities increasingly granting variances to facilitate this gentle density approach.

For larger-scale investors, Scott details the CMHC MLI Select program offering up to 95% financing with amortizations up to 50 years for multifamily properties of five or more units. He shares insights from his team's development projects in Alberta, where affordable rental requirements are more achievable than in Ontario markets. Interest rates through this program can reach the low 3% range—significantly better than traditional residential investment rates.

Scott provides crucial guidance for investors who've been told they're maxed out by their banks. Rather than defaulting to expensive B lenders or risky private mortgages, he explains how commercial lending offers A-rate equivalents with similar fees while basing approval on property performance rather than personal income. This is essential knowledge for scaling a real estate portfolio beyond traditional lending limits.

•       Interest Rates at Bottom: Bank of Canada holding at 2.25% with most banks predicting flat rates through 2026; maybe one more cut possible, but significant decreases unlikely unless economy crashes.

•       Buyer's Market Window Closing: Current market favors buyers with negotiating power, but expect increased competition and higher prices as sidelined investors return once they realize rates won't drop further.

•       ADU/EDU Strategy: Adding accessory dwelling units to existing properties transforms non-cashflowing investments into profitable ones; cities are granting more variances and relaxing zoning rules for gentle density.

•       CMHC MLI Select Financing: Multifamily properties (5+ units) can access up to 95% LTV with 50-year amortizations and rates in the low 3% range—significantly better than traditional investment property rates.

•       Commercial vs B Lending: When maxed out at banks, commercial mortgages offer A-rate equivalents based on property performance, avoiding the higher rates (0.5-1%+) and fees of B lenders.

•       US Investment Opportunity: $200 billion Fannie/Freddie bond announcement will lower US rates; Canadians can access DSCR loans that qualify based on property income without needing US credit history.

•       Private Lending Warning: Avoid private mortgages for long-term holds; lenders increasingly reluctant to renew in cooling markets, creating potential disaster scenarios for borrowers.

•       Long-Term Investment Mindset: Real estate historically appreciates over time—buy in buyer's markets, hold through cycles, and use tools like the ANDEX chart to understand long-term asset class performance.

•       LendCity Mortgages (Pre-Approvals & Strategy Calls): lendcity.ca

•       The Truth About Real Estate Investing Podcast (Erwin Szeto): Search on your preferred podcast platform

•       CMHC MLI Select Program Information: cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/multi-unit-insurance/mliselect

•       ANDEX Chart (Historical Asset Performance): Search "ANDEX chart" for investment class performance visualization