The war in the Middle East is impacting the cost of some mortgages in Canada. In recent weeks, three- and five-year fixed mortgage rates have surged by 0.5 percent, reflecting broader economic pressures. As of April 2, 2026, the average rate for a five-year fixed mortgage stands at 4.95 percent, while the average variable rate is at 4.2 percent.
This increase comes at a critical time, as approximately 1.4 million mortgages are set to be renewed by the end of the year, representing about 23 percent of all mortgages in Canada. With the Bank of Canada’s key interest rate currently at 2.25 percent, the landscape for borrowers is becoming increasingly challenging.
Marshall Tully, a mortgage expert, noted, “Unfortunately, it’s possible that trend could continue,” indicating that homeowners may need to brace for further increases. The lowest available five-year fixed mortgage rates for high-ratio mortgages are currently around 4.04% to 4.09%, which is a stark contrast to the rates secured by homeowners during the pandemic era, which ranged from 1.5% to 2%.
Benjamin Tal, another financial analyst, pointed to external factors, stating, “If you are upset that the five-year fixed mortgage rate you were hoping to get just went up, you can blame Trump for that.” This highlights the interconnectedness of global events and local economic conditions.
Moreover, the ongoing conflict in the Middle East has created volatility across global financial markets and driven energy prices higher, further complicating the situation for Canadian homeowners. As approximately 60% of all outstanding mortgages are expected to renew in 2025 or 2026, the implications of rising rates could be significant.
Financial advisor Moshe Lander emphasized the importance of early engagement with lenders, saying, “The biggest misconception is that banks are out to get you, but if you approach them early enough in the process, they will work with you to make sure you don’t have to fire-sell your home.” This advice may prove crucial for those facing renewal in the coming months.
Details remain unconfirmed regarding the exact impact of geopolitical tensions on future mortgage rates. The long-term effects of the war on the Canadian economy and mortgage rates remain uncertain, leaving many homeowners anxious about their financial futures.
