The quick read: the floor that formed in June held through the summer, then softened in September. Sales slipped, listings piled up in several markets, and on October 28 the Bank of Canada raised rates for the first time since 2023. Arrears at private lenders are climbing fastest. Here is what the quarter means for your book.

The quarter in five numbers

The national picture: the floor is holding, but it is soft

In Q2 we said a floor was forming. It held for two more months: the national MLS Home Price Index rose 0.1% in July and was flat in August. September broke the streak with a 0.4% decline, leaving the index about 0.3% lower for the quarter and 3.4% below a year ago. The annual decline is slightly smaller than June's 3.6%, so values are no worse than they were, but the momentum we saw at the start of the summer has faded.

Demand is the reason. September sales fell 2.3% from August and came in 7.7% below September 2025. The sales-to-new-listings ratio, which crossed back above 50% in June, slipped to 48.8%, below its long-term average of about 55%. Months of inventory rose to 4.9, close to the long-term norm of five. CREA's senior economist summed it up plainly: many of Canada's housing markets "took a step back in September." For a lender, this is a balanced market that is tilting toward buyers. Your collateral is still marketable, but a forced sale now competes with more listings and more patient buyers.

Construction sent mixed signals. September housing starts rose 3% from August to 248,896 units at a seasonally adjusted annual rate, but actual starts in centres of 10,000 or more were down 11% from a year earlier. CMHC's deputy chief economist warned that a key risk now is "not building enough during this period of softening housing markets." That supports resale values over the longer term. In the near term it is another reason for care on construction and land files.

Rates and renewals: the relief is over

The Bank of Canada held at 2.25% at every decision in the quarter. Then, on October 28, it raised the policy rate 25 bps to 2.50%. The Bank pointed to inflation that has run near 3% since April and is expected to reach about 3.5% by year-end, driven by energy prices, and said it wants to stop those increases from spreading to other goods and services. It projects inflation to average 3% in 2027 before returning to 2% in mid-2028, expects housing to "remain relatively weak," and warned that "there could be a need to increase the policy rate further."

Posted rates moved before the Bank did. The 5-year posted rate rose from 6.09% to 6.19% in early October, while the 1-year held at 5.49%. In Q2 we told you that an alt-A or private borrower's path back to an institutional lender was workable again. That path is now narrowing. Higher contract rates raise the qualifying hurdle on every switch and refinance, so expect more borrowers to ask you to renew because they cannot move. CMHC says the largest renewal shock has likely passed, but its data run only to mid-2026 and predate the hike. If the Bank moves again on December 9, renewal stress returns to the private segment first.

A market-by-market look

Toronto and the GTA

Sales fell 9.0% year over year in September and the average price dropped 4.9% from June to $1,006,409. The MLS HPI composite is down 4.7% from a year ago, an improvement on June's 5.4%, so the decline is slowing. Condo apartments remain the soft spot, with the average down 7.7% across TRREB and 12.0% in the 905. At a sales-to-new-listings ratio of 37.8%, buyers set the terms.

Simcoe County

This is the weakest market in this update. The benchmark fell 4.2% in the quarter to $762,300 and is down 7.2% from a year ago. Sales dropped 15.8%, months of inventory reached 6.3, and homes sold at 96% of list after 46 days on market on average. Treat Simcoe renewals and second mortgages as higher risk.

Metro Vancouver

The composite benchmark slipped 2.1% from June to $1,075,900, down 5.5% from a year ago, with detached homes down 7.3%. The summer sales rebound faded: September sales fell 8.4% year over year, and the sales-to-active-listings ratio dropped from 14.6% in June to 10.9%. GVR describes a market driven by end users while investors wait. Plan on slower, price-sensitive exits.

Calgary and Edmonton

Calgary's benchmark sits at $566,700, about 1% lower than both June and last year. Supply has loosened from just over three months in June to just under four, and apartment condos are the exception to an otherwise steady market: prices are down more than 8% year over year with over five months of supply. Edmonton's benchmark of $423,100 is essentially flat year over year (down 0.3%), but inventory is up 16.7% and new listings 11.3%. Values are holding in both cities. Rising supply is the early warning to watch.

Montreal

Prices held: the single-family median of $635,000 is up 0.5% year over year and the condo median is flat at $430,000. Supply is the story. Active listings are up 20% from a year ago, sales fell 12%, and condo days on market rose to 65 from 48. Montreal collateral is keeping its value but taking longer to sell, especially condos.

Winnipeg

September sales fell 10% year over year and active listings rose 14% to 4,234, giving buyers more choice. Year-to-date average prices are still up 3% for detached homes ($467,687) and 2% for condos. The board does not publish a benchmark index, so we read Winnipeg's values from averages and treat them with some caution.

Atlantic Canada

Newfoundland and Labrador is the strongest market in this update. The benchmark is up 5.5% to $355,600, active listings are down 18.4%, and months of inventory fell to 4.3 from 5.5 a year ago. Nova Scotia is moving the other way: the benchmark is down 2.5% to $423,200, active listings are the highest for a September in more than five years, and months of inventory rose to 6.1.

What this means for your lending book

Loan-to-value headroom. Apply the year's benchmark changes to a loan written at 80% LTV in September 2025 and the effective LTV today is about 82.8% nationally, 83.9% in the GTA, 84.7% in Metro Vancouver and 86.2% in Simcoe County. The same loan sits near 80% in Calgary, Edmonton and Montreal, and has gained cushion in Newfoundland and Labrador (75.8%). Interest-only loans get no help from amortization, and CMHC reports that 69.7% of GTHA balances at mortgage investment entities are interest-only. These are illustrations on published benchmarks, not appraisals. Where values have moved this much, a current appraisal is not optional.

Liquidity. Inventory is building in Montreal, Simcoe County, Nova Scotia and Edmonton, and Vancouver's sales-to-active ratio has dropped sharply since June. Budget at least four months for a clean exit in the GTA and Simcoe, longer for condos, and expect to sell below list. Newfoundland and Labrador and Calgary detached homes are the most liquid collateral in this update.

Arrears. CMHC's Fall 2026 report says mortgage investment entities, which include MICs, "show the strongest signs of lender-side stress." Their 90+ day arrears rate reached 2.57% in Q2 2026, up from 2.25% in Q1 and 1.83% a year earlier, compared with 0.28% at the chartered banks. In the GTHA, 11.1% of MIE balances were in arrears in Q1 2026, more than three times the rate in the rest of Canada. The share of uninsured GTHA MIE balances above 80% LTV rose from 1.6% in Q1 2024 to 9.2%, and nearly one-third of GTHA MIE balances belong to borrowers spending more than 60% of their income on debt payments. Ontario's arrears rate reached 0.32%, up from 0.21% a year ago and approaching levels last seen around 2008, and CMHC expects it to keep rising through mid-2027. Quebec remains lowest at 0.19%, and Alberta arrears have declined. Stress-test your GTA and Simcoe renewals hardest.

What we are watching in Q4

• December 9, Bank of Canada. A second increase would turn a soft market into a renewal-stress market for private books. A hold gives borrowers time to adjust.
• The sales-to-new-listings ratio. It fell below 50% in September. A move back above 50% would firm the floor. A slide toward 45% would restart the LTV drift.
• Inventory in Montreal, Simcoe, Nova Scotia and Edmonton. These are the markets where supply is building fastest, and where exit timelines will stretch first.
• CMHC's next arrears release. It will be the first to cover Q3 2026. Watch MIE arrears in the GTHA and Southwestern Ontario.

The bottom line

Rates are rising into a softening market, so underwrite each market on its own numbers. The national picture looks steady, but it hides an Ontario and BC book that has already given up four to six points of LTV cushion, private-lender arrears that are rising fastest where those cushions are thinnest, and a rate path that just turned against your renewing borrowers. Current appraisals, no appreciation assumptions and market-specific exit timelines are the right defaults for Q4.

Collateral decisions are only as good as the valuation behind them. If you want current, defensible appraisals on the files you are watching, talk to the Value Connect team.

Sources: TRREB Market Watch and Simcoe County Market Watch (June and September 2026); CREA board statistics for Calgary, Edmonton, Greater Vancouver, Winnipeg, Newfoundland and Labrador, and Nova Scotia (September 2026); Greater Vancouver REALTORS and CREB releases (June 2026); QPAREB monthly statistics (June and September 2026); CREA national statistics (June to September 2026); Bank of Canada rate announcement (October 28, 2026), policy rate history and posted chartered bank rates (September 30 to October 28, 2026); CMHC Residential Mortgage Industry Report Fall 2026 (arrears to Q2 2026), Ontario arrears release (October 27, 2026) and housing starts (September 2026). Effective LTVs apply 12-month benchmark changes to an 80% LTV loan before amortization. This update is for information only and is not financial or lending advice.