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, with the average rate for a five-year fixed mortgage now standing at 4.95 percent as of April 2, 2026. 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.
The Bank of Canada’s key interest rate is currently at 2.25 percent, and analysts predict that fixed mortgage rates will continue their upward trend throughout April 2026. The lowest available five-year fixed mortgage rate for high-ratio mortgages is around 4.04% to 4.09% as of April 4, 2026.
Marshall Tully commented, “Unfortunately, it’s possible that trend could continue,” highlighting concerns over the ongoing volatility in global financial markets. Benjamin Tal added, “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,” pointing to external factors influencing the Canadian economy.
Homeowners who secured five-year fixed mortgages during the pandemic benefitted from rates as low as 1.5% to 2%. However, with approximately 60% of all outstanding mortgages in Canada set to renew in 2025 or 2026, many may face significantly higher rates.
The stress test for mortgage borrowers requires them to qualify at the higher of their contract interest rate plus 2% or the Bank of Canada benchmark rate of 5.25%. This adds another layer of complexity for those looking to refinance or secure new mortgages.
Moreover, the ongoing conflict in the Middle East has created volatility across global financial markets and driven energy prices higher, further complicating the landscape for Canadian homeowners. Moshe Lander noted, “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.”
Details remain unconfirmed regarding the exact impact of these geopolitical tensions on future mortgage rates. Observers are closely monitoring the situation as the Canadian economy navigates these turbulent waters.