The week's best fixed and variable mortgage rates
The Globe and Mail· 300 words · 2 min read
War in the Middle East is upending what was supposed to be a relatively stagnant year in both fixed- and variable-rate mortgages.
Bond yields, which help lenders determine their fixed mortgage rates, have shot up since the conflict with Iran began, and markets are now pricing in the expectation of a Bank of Canada rate hike by the end of 2026.
Victor Tran, a mortgage specialist for Rates.ca, said some lenders he works with have already raised their fixed rates by 10 to 15 basis points, and further increases could be coming if the war continues.
The central issue around the Middle East conflict is inflation. Oil shipments have screeched to a halt in the Persian Gulf, and energy prices have skyrocketed as a result. If the war continues, it will result in widespread inflation in sectors such as food and transportation.
Bond markets have already reacted to those fears, with the Canada five-year bond nearing the 3.1-per-cent mark on Thursday afternoon, after it bottomed out around 2.7 per cent before the war started.
The Bank of Canada would need to increase interest rates if inflation were to rise, leading to higher variable-rate mortgage payments.
The good news is that some experts, such as Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce, say they expect the U.S. will back off from the Iran conflict in the short term. A swift end would bring mortgage markets back in line to their stagnant prewar trajectory in a matter of weeks, he said.
Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today's mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
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