Fixed mortgage rates see some easing amid Trump tariff threats. Here’s why
Canada’s mortgage market is reacting to fears this week that United States President Donald Trump’s threatened tariffs could deliver a sharp blow to the Canadian economy.
Experts say that home buyers and owners with a mortgage up for renewal could secure a cheaper rate amid the dysfunction, but also warn that the forecast for the spring housing market is far from clear thanks to the lingering uncertainty.
The five-year Government of Canada bond yield saw a sharp decline on Monday in the wake of Trump’s weekend announcement that blanket tariffs would hit the Canadian economy on Tuesday — an order that he later pushed to instead take effect in 30 days.
That metric — a key input for popular five-year, fixed-rate mortgages in Canada — fell roughly 20 basis points when markets opened to as low as 2.58 per cent, a low not seen since April 2022, according to Ratehub mortgage expert Penelope Graham.
Trump’s deferral later in the day led to a recovery in the key yield, but it has continued to falter since, holding just above 2.62 per cent on Wednesday afternoon. That’s well below recent highs of roughly 3.28 per cent in mid-January.
Graham in a release explained that investors were looking for safe haven investments rather than stocks amid fears of a Canadian recession resulting from the tariffs.
But even with the most immediate fears abating, she said that Canadians are “already enjoying discounts,” with the lowest available five-year, fixed mortgage in Canada holding around 3.89 per cent as of Tuesday, according to the rate comparator. The cheapest options will largely be in the insured mortgage space where buyers have put less than 20 per cent down on their purchase.
While the Bank of Canada’s interest rate decisions affect
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