Nine reasons why waiting for homes to become more affordable may not be the best plan

Tariff turmoil is fuelling both inflation and disinflation at the same time, but which force is greater is yet to be known. The verdict could affect thousands of would-be homebuyers or mortgage refinancers.

At the moment, the “inflation should cool” narrative is winning more headlines than “inflation is heating up.”

That sentiment is echoed by:

• A bunch of smart people just polled by the Bank of Canada who predicted a roughly 20-basis-point (bps) drop in five-year rates by year-end;
• Overnight lending markets are pricing in one 25-bps Bank of Canada cut on or before January, according to CanDeal DNA;
• Bay Streeters, whose median forecast is for 50 bps of Bank of Canada easing by Dec. 10, 2025, as per Consensus Economics.

If you’re looking for a mainstream economist taking the other side, good luck. A Reuters poll of 28 top economists in July showed exactly zero of them were predicting higher rates from now to the end of 2026.

If markets were any more lopsided, we’d be yelling “Timber.”

Are markets ever wrong?

Of course, that’s a rhetorical question. They can be famously wrong when markets lean to one side like the Leaning Tower of Pisa.

History is littered with such examples, one being the great bond market massacre of 1994. Despite it being a different set of circumstances, markets were caught off guard by preemptive tightening to curb emerging inflation.

Five-year yields, which help drive mortgage rates , rocketed 300-plus bps in 12 months. The Bank of Canada hiked its rate by 400-plus bps.

Markets are seldom that wrong, but it happens.

The current consensus is unusually fragile, built on a series of critical assumptions about the central bank’s potential response to unprecedented trade-related uncertainty.

This sets up an interesting question for homebuyers and mortgage refinancers: If rates are your driving decision criterion, should you buy or refinance now, or wait?

The risks of waiting

If you absolutely need to purchase a home or refinance, don’t play the rate-guessing game. Unknowable future events cause markets to botch forecasts routinely, and the average person’s crystal ball doesn’t work much better.

That said, if you like to roll the dice — and are prone to the belief that rates or homes will be more affordable if you just wait it out — consider these points first:

1. Inflation surprises — such as new tariffs, oil shocks, artificial intelligence (AI) investment outweighing AI job losses, loonie depreciation or a combination — could potentially yank rates higher with little warning.
2. Even if rates don’t climb, they could easily go sideways. Canada’s policy rate has done that at least two-thirds of the time since the global financial crisis, as measured by consecutive three-month periods of no rate changes. Indeed, rates could tread water for years — like they did from 2010 to 2014 — putting qualified borrowers who wait no further ahead.
3. Interest rates can fall, but home prices may adjust, wiping out any affordability gains.
4. If rates fall after you buy, you can lock in lower rates later. But if prices rise and you wait to buy, you can’t go back in time and pay less. Like they say, you can refinance rates; you can’t refinance prices.
5. Sellers may get bolder in a lower-rate environment, pulling listings until prices climb.
6. Waiting risks losing the home you love to a less patient buyer.
7. If your cash flow is tight, a sudden rate spike could make it harder to qualify for the mortgage you need.
8. Locking in a rate today lets you budget with certainty instead of riding the market’s mood swings. Longer-term rate holds range from 90 days to 130 days at the Bank of Montreal and 150 days at Nesto Inc. And if rates drop, you can reset your rate lower before closing.
9. If you’ve got a fixed-rate mortgage that you want to break and refinance before maturity, falling rates mean rising mortgage prepayment penalties. Depending on your lender and mortgage type, such penalties could easily offset most or all of the rate savings.

Time Isn’t Money

If you’re not completely financially prepared to buy, or you need time to get your mortgage qualifications in order, then, yes, it makes sense to wait.

That’s true regardless of where the rate roulette wheel stops at year-end.

Maybe the experts will be right this time. Research on interest rate futures accuracy suggests they are right more than wrong over one- to two-quarter prediction horizons.

Perhaps we even get a crisis that drives down rates and backs the experts into being right.

Or maybe home prices will sink in your region, lowering your payments and down payment.

That’s a lot of maybes, but one thing is certain: if you’re a homebuyer who’s invented a time machine that lets you know home prices will be lower next year, wait to buy. After all, rate changes are temporary, but price drops (which reduce your mortgage principal, down payment and closing costs) are forever.

Barring that, timing the market works better in hindsight than in real life. For most would-be buyers or refinancers, waiting is historically the gamble with worse odds.

Source: MSN Money