How Will Tariffs Affect Canadian Mortgage Rates?

Have you ever wondered how will tariffs affect Canadian mortgage rates based on decisions made in the United States? It might sound strange, but changes in U.S. trade policies, like Trump’s tariffs, can actually affect how much you pay for your home loan. If Donald Trump and the U.S. government decide to charge extra taxes (tariffs) on goods coming into their country, it could have a ripple effect on our economy, including mortgage rates.

What Are Tariffs, and Why Do They Matter?

Tariffs are basically taxes that countries put on imported goods. The idea is to make foreign products more expensive so people buy more locally made items. While that may sound good for local businesses, it can also lead to higher prices for everyday items. This can cause inflation, which means your money doesn’t go as far as it used to.

How will tariffs affect Canadian mortgage rates? When inflation rises, central banks—like the Bank of Canada—often raise interest rates to slow down spending. This is where mortgage rates come into play.

How Will Tariffs Affect Canadian Mortgage Rates?

If the U.S. puts tariffs on imported goods, how will tariffs affect Canadian mortgage rates?

✅ Higher Prices on Goods – Since Canada and the U.S. trade so much, if prices go up in the U.S., they’ll likely rise here too.

✅ Weaker Canadian Dollar – If Canada’s economy slows down because of reduced trade, our dollar might lose value. This could make imports more expensive and push prices up even more.

✅ Higher Inflation – If prices keep going up, the Bank of Canada may raise interest rates to control inflation.

✅ Higher Mortgage Rates – Since mortgage rates are tied to interest rates, this could mean higher monthly payments for homeowners with variable-rate mortgages. Even fixed mortgage rates could rise if the cost of borrowing increases.

Current Economic Trends

As of early 2025, Canada’s economy has been doing better than expected, growing by 2.6 percent in the last quarter of 2024. But with the possibility of U.S. tariffs, things could change quickly. How will tariffs affect Canadian mortgage rates? The Bank of Canada is keeping a close eye on these developments and has even hinted that it may lower interest rates if tariffs hurt the economy. That would be good news for mortgage holders!

What Can Homeowners and Buyers Do?

🏡 For Homeowners: If you have a variable-rate mortgage, it’s a good idea to check in with your lender or mortgage advisor. If rates start rising, you might want to switch to a fixed-rate mortgage to lock in your payments.

🏡 For First-Time Buyers: If you’re planning to buy a home soon, consider getting pre-approved for a mortgage. This locks in your rate for a set period, protecting you from sudden increases.

🏡 For Everyone: Stay informed! Keep an eye on news about U.S. tariffs and interest rate changes. Even small increases in mortgage rates can have a big impact on your monthly payments.

Final Thoughts

Even though U.S. trade decisions may seem far away, they can have a big effect on your finances here in Canada. How will tariffs affect Canadian mortgage rates? They could push mortgage rates higher, making it more expensive to borrow money for a home. But by staying informed and planning ahead, you can be prepared for whatever happens.

Need real estate advice to help with your home buying decision? Reach out now — I’m here to help!