Canadians struggling with the rising cost of living could begin to experience financial relief by 2027, as mortgage renewal pressures ease and interest rates stabilize, according to a new report from CIBC Economics. The bank says many of the financial challenges facing households are expected to peak this year before gradually improving over the next 18 months.
The report notes that homeowners renewing mortgages have been among the hardest hit by higher borrowing costs in recent years. However, Bank of Canada research suggests that by the second half of 2027, the increase in mortgage payments at renewal is expected to become much more modest, reducing financial strain for many households.
CIBC economists also expect the Bank of Canada to maintain a relatively stable interest-rate environment through 2027, with only a modest increase in its policy rate anticipated. A steadier rate outlook is expected to support consumer spending and improve confidence after several years of elevated borrowing costs.
The report adds that easing gasoline prices and a more stable trade environment could provide additional relief. Lower fuel costs would leave households with more disposable income, while reduced uncertainty over Canada-U.S. trade could encourage businesses to invest, hire more workers, and strengthen the labour market.
Despite the more optimistic outlook, CIBC cautioned that Canadians should not expect prices to fall significantly. Instead, the anticipated relief will likely come from slower growth in household expenses, improved wage growth, and reduced pressure from mortgage renewals rather than a broad decline in the cost of living. Inflation is expected to remain close to the Bank of Canada’s target over the medium term.
The bank also warned that the outlook depends on several factors, including stable energy prices and the absence of major new trade disruptions. If global geopolitical tensions intensify or additional tariffs are imposed, Canadians could face renewed pressure on household budgets. Nevertheless, CIBC says the overall economic outlook points to gradually improving conditions, with consumers expected to regain more financial flexibility beginning in 2027.