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.
With approximately 1.4 million mortgages set to be renewed by the end of the year, representing about 23 percent of all mortgages, many Canadians are feeling the pressure of these rising rates. Marshall Tully, a financial expert, noted, “Unfortunately, it’s possible that trend could continue,” highlighting the uncertainty surrounding future mortgage costs.
Benjamin Tal, another industry analyst, pointed to external factors influencing these 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 statement underscores the interconnectedness of global events and their impact on local economies.
As homeowners reflect on their options, Moshe Lander, a financial advisor, reassured them, 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 is particularly relevant as many face the daunting task of renewing their mortgages.
Looking ahead, fixed mortgage rates in Canada are expected to continue their upward trend throughout April 2026. The lowest available five-year fixed mortgage rates for high-ratio mortgages are currently around 4.04% to 4.09%. This increase is occurring against the backdrop of the Bank of Canada’s key interest rate, which is currently at 2.25 percent.
Moreover, approximately 60% of all outstanding mortgages in Canada will renew in 2025 or 2026, further complicating the landscape for homeowners. Many who secured five-year fixed mortgages during the pandemic era enjoyed rates as low as 1.5% to 2%, making the current environment particularly challenging.
As the situation evolves, the mandatory six-year CUSMA review in 2026 represents a major inflection point for Canada-U.S. economic relationships, which could also influence mortgage rates. The ongoing conflict in the Middle East has created volatility across global financial markets and driven energy prices higher, adding another layer of complexity to the mortgage landscape.
Details remain unconfirmed regarding the exact impact of these geopolitical tensions on future mortgage rates. The long-term effects of the war on the Canadian economy and mortgage rates remain uncertain, leaving homeowners and potential buyers in a state of apprehension as they navigate these turbulent times.
