Every real estate decision eventually comes down to the cost of capital, and right now that cost is climbing. Higher bond yields are pushing mortgage rates upward across Canada, and the data tells a story that every buyer, owner, and investor needs to understand before making their next move.
Drew Donaldson, Mortgage Broker and Principal at Donaldson Capital, has been candid about the pressure bond yields are putting on borrowing costs this year. Yet he still expects a strong finish to the housing market in 2026. That combination, rising financing costs alongside resilient demand, is exactly the kind of tension that separates disciplined investors from reactive ones.
The numbers behind this shift are sobering. A 2024 survey found that 10.6 percent of Canadian households, roughly 1.74 million buyers, purchased their first home between 2019 and 2023, when borrowing costs sat near record lows. By 2024, 34.1 percent of that cohort reported financial strain from higher mortgage payments, more than double the 16.4 percent reported by first-time buyers back in 2018. Dissatisfaction among this group has climbed just as sharply, from 13.4 percent in 2018 to 33.1 percent in 2024.
What this tells me as an investor is that the financing environment has fundamentally repriced risk for an entire generation of buyers who purchased during a low-rate window. That repricing is not just a personal finance problem, it is a market signal. When brokers in the country’s most expensive metros describe turning away qualified buyers even as prices soften, that is a demand-side shift worth tracking closely for anyone evaluating rental markets, exit timing, or acquisition strategy.
In the GTA and the GVA, that’s become very compromised. It’s very, very difficult. You’re saying no to many people who come through the door now, even with prices falling as they have.
For investors, this squeeze cuts two ways. On one side, a strained first-time buyer pool means softer entry-level price competition and potentially more negotiating leverage on acquisitions in the near term. On the other, it reinforces rental demand, since households priced out of ownership do not disappear from the housing market, they simply shift into the rental column. That is a structural tailwind for well-positioned rental assets even as ownership affordability tightens.
The ongoing discussion around amortization rules adds another layer worth watching. Any policy adjustment that extends or restricts amortization terms directly changes monthly qualifying payments, which in turn shifts how much buying power moves through the market. Investors who track these policy signals alongside bond yield movements will have a clearer read on where both ownership demand and rental demand are heading over the next several quarters.
The lesson here is not to fear a tightening market, it is to price it correctly. Timing, financing structure, and a clear view of where demand is being pushed matter more than headline price movement alone.
