If you’ve been watching mortgage rates lately, you may have noticed fixed rates ticking up over the past couple of months.
The war in Iran might feel far removed from your monthly mortgage payment. It isn’t. Here’s how what’s happening in Iran is pushing Canadian mortgage rates higher and what to do about it if you’re buying or renewing this year.
Watch my video or read on for more details:
How Does the Bond Market Drive Fixed Mortgage Rates?
Fixed mortgage rates in Canada aren’t set by the Bank of Canada. They’re tied to the bond market. Specifically, the US bond market, which is the largest financial market in the world, larger even than the US stock market.
When there’s uncertainty, like a war, a geopolitical crisis, concerns about government debt, bond traders start pricing in what’s called a risk premium. That pushes bond yields higher, and fixed mortgage rates follow.
Canada and the US move in near lockstep on this. When something shifts the US bond market, Canadian mortgage rates feel it too. That’s what the war in Iran is doing right now.
How Are Variable Rates Affected by the War in Iran?
If you’re in a variable-rate mortgage, you probably haven’t seen much movement yet. Variable rates are tied to the Bank of Canada’s prime rate, which hasn’t changed.
The risk down the road is inflation. Higher oil prices, which are a direct result of the conflict, tend to work their way through the broader economy over time. If inflation picks up meaningfully, the Bank of Canada may have to respond with rate increases. That’s not a certainty, but it’s worth having on your radar.
What to Do About My Mortgage Rate Right Now?
Whether you’re buying this year or coming up for renewal, the practical move is to get a rate hold. Locking in a rate now protects you if rates continue to climb while you’re still in the process.
A fixed rate hold makes sense as a baseline, but whether fixed or variable is the right long-term call depends on your situation, your timeline, and your comfort with uncertainty. That’s a conversation you should have with a mortgage broker before you commit. Please reach out at 780-720-2490.
Whether you are preparing to buy your first home or your fifth, if you’re looking to get pre-approved for a mortgage in Edmonton, fill out my online application. I’m here to help you every step of the way.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’m trusted partner who will help you get the right mortgage for your home or investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.
