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 increased by 0.5 percent, raising concerns among homeowners and potential buyers alike.
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 time when 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.
Marshall Tully, a financial expert, commented, “Unfortunately, it’s possible that trend could continue,” indicating that the upward trajectory of mortgage rates may persist. The Bank of Canada’s key interest rate is currently at 2.25 percent, which has contributed to the rising costs.
Benjamin Tal, another financial analyst, noted the broader implications of these rate changes, 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 reflects the interconnectedness of global events and local financial markets.
Homeowners who secured five-year fixed mortgages during the pandemic era enjoyed rates as low as 1.5% to 2%. However, with the current rates climbing, many may face challenges when renewing their mortgages.
The lowest available five-year fixed mortgage rate in Canada is currently around 4.04% to 4.09% for high-ratio mortgages as of April 4, 2026. Additionally, approximately 60% of all outstanding mortgages in Canada are expected to renew in 2025 or 2026, further intensifying the impact of rising rates.
The stress test for mortgages requires borrowers to qualify at the higher of their contract interest rate plus 2% or the Bank of Canada benchmark rate of 5.25%. This regulation aims to ensure that borrowers can handle potential increases in interest rates.
Moreover, the ongoing conflict in the Middle East has created volatility across global financial markets and driven energy prices higher, which may further influence mortgage rates in Canada. Observers note that the long-term effects of these geopolitical tensions on the Canadian economy and mortgage rates remain uncertain.
Details remain unconfirmed regarding the exact impact of these global events on future mortgage rates. As the situation evolves, homeowners and potential buyers will need to stay informed about the changing landscape of mortgage financing in Canada.
