Canada Housing
Middle East war fuels mortgage rate spike for Canadian renewals
The ongoing Middle East conflict is driving up fixed mortgage rates in Canada as oil price surges and inflation fears push bond yields higher, leaving 1.4 million households facing renewals in a tougher market, CBC News reported.
Toronto mortgage broker Marshall Tully told CBC News that three- and five-year fixed rates rose 0.5 percentage points in three weeks last month. "It’s unfortunate, but this trend might persist," Tully said.
Five-year fixed rates hit 4.95% by April 2 from near 4% weeks prior, with three-year at 4.59%, while variable rates averaged 4.2%.
CIBC Deputy Chief Economist Benjamin Tal attributed the climb to war-driven oil spikes and Iran's Strait of Hormuz closure, alongside U.S. tariffs, noting, "I believe the 5-year fixed rate is already too high for this slow economy".
Canada Mortgage and Housing Corporation (CMHC) estimates 23% of mortgages renew by year-end, many from 2021's low rates.
NerdWallet Canada's Clay Jarvis explained to Global News that investors fleeing inflation fears raise U.S. Treasury yields, which Canadian lenders mirror.
Canada Mortgage and Housing Corporation (CMHC) estimates 23% of mortgages renew by year-end. Photo: Freepik
Concordia’s Moshe Lander told CBC, "The longer the situation persists, the more unpredictable U.S. policy becomes, and that unpredictability affects the costs of Canadian goods and services," forecasting March inflation upticks.
True North Mortgage CEO Dan Eisner confirmed fixed rates up 0.25% since war start. Bank of Canada holds at 2.25%, but prolonged conflict could force hikes.
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