Will Interest Rates Affect London Ontario Home Prices in 2025–2026?

Interest rates have dominated the housing conversation for years — and for good reason.They influence everything: prices, demand, inventory, and buyer behaviour.So the question is:“How will interest rates affect London home prices in 2025 and 2026?”

Here’s a breakdown using the latest economic forecasts.

1. Where Rates Stand Today

As of late 2025, major lenders report:

• 5-year fixed: 5.4–5.8%

• Variable: 5.9–6.2%

These are higher than pandemic lows but not historically extreme.

2. What Banks Predict for 2026

According to RBC, TD, and BMO:

• Rate cuts are expected to begin slowly in 2025

• More meaningful drops are forecasted for mid-to-late 2026

CREA aligns with this outlook, suggesting renewed buyer activity as affordability improves.

3. How This Impacts London Prices

✔ 2025: Stabilization

Higher rates keep price growth limited, but not negative.London remains more affordable than GTA regions, softening the impact.

✔ 2026: Return of Buyer Demand

As rates drop, more buyers qualify for mortgages.This normally leads to:

• More showings

• More multiple offers

• Gradual price appreciation

✔ 2027+: Growth Resumes

London’s fundamentals — affordability, population growth, and limited housing supply — point toward steady price increases after rates settle.

4. Why London Is Less Rate-Sensitive Than the GTA

London benefits from:

• Lower average prices

• Higher relative affordability

• A strong rental market

• A growing job baseThis buffers the city from extreme price swings.

Bottom Line

Yes — interest rates will impact London’s housing market, but mostly in positive ways as they begin to drop.Expect a flat 2025, a more active 2026, and solid, stable growth afterward.

If you’d like to talk about how rate changes affect your specific buying or selling plans, I’d be happy to walk you through it.

Justin Skrypnyk

Real Estate Broker

519-639-5176