How Will Trump’s Tariffs Affect Your Mortgage?
Bank of Canada has been promising to keep inflation in check, and economists are calling for interest rates to come down. But, with the uncertainty of U.S. President, Donald Trump’s, 25% tariffs scheduled* to go ahead March 4th, what does that mean for your mortgage?
Ultimately, while the tariffs themselves don’t directly affect mortgages, the economic upheaval they might cause could change the Bank of Canada’s plans to cut rates. And with over 1 million homeowners set to renew mortgages in Canada this year, those considering a variable rate are increasing.
Some suggest that homeowners up for a mortgage renewal could secure a cheaper rate if the Bank of Canada slashes rates, however, the spring housing market forecast is far from set given the cross-border duel over tariffs. If the trade war is avoided, there remains a chance rates could even increase.
It undoubtedly makes for a tricky time to renew.
Here are a few options you may want to consider:
Option 1
Wait to see what Bank of Canada does March 12th and if no cuts are made, or if rates increase, lock in a fixed rate.
Option 2
Renew at a variable rate in the hopes rates get cut in March and again in the following months, and see some savings over five years.
Option 3
Take out a fixed-rate mortgage of less than five years and refinance at a possible lower rate in say, three years.
3 Tips for Homeowners
- Consult a Mortgage Expert: Find an expert that can walk through the scenarios with you to choose the best option for you.
- Shop around: If you don’t want to take the risk to wait, shop around if you’re up for renewal to find the best rate.
- Consider Fixed vs. Variable Options: Use that expert from #1 to decide whether a fixed or variable rate aligns better with your financial goals.
* as of February 28, 2025
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