Tariffs might seem like distant political drama—but they hit closer to home than most people think, especially when it comes to your mortgage. If you’re a Canadian homeowner or planning to buy a home soon, it’s time to understand how international trade tensions—especially between the U.S. and Canada—can ripple through the economy and push your mortgage costs higher.
As early as February, U.S. President Donald Trump could introduce sweeping new tariffs on Canadian imports. And with that comes a wave of inflationary pressure, market volatility, and economic uncertainty. The impact on your mortgage? It could be significant.

Let’s break it down and help you prepare, so you can protect your finances before the tide turns.

Understanding the Economic Risks of Tariffs

Trade tariffs don’t just affect factories and border crossings—they touch everything from the price of groceries to the interest rates on your mortgage.

When tariffs are imposed, especially by a country as economically linked as the U.S., Canada’s cost of doing business rises. Imported goods become more expensive, businesses pass those costs on to consumers, and inflation starts creeping up. That, in turn, forces the Bank of Canada to consider raising interest rates to cool down rising prices.

In this environment, housing costs can spike—not just from more expensive materials, but also from higher borrowing rates.

How Tariffs Could Drive Canadian Mortgage Rates Higher

So what does this mean for your mortgage?
Mortgage rates in Canada are increasingly tied to global economic shifts — and Trump’s tariffs are no small factor. We dive deeper into this dynamic in our article on how Canadian mortgage rates are reacting to U.S. trade tensions.

Inflation Could Push Rates Up

If tariffs raise the cost of imported goods, inflation may rise faster than expected. And the Bank of Canada tends to raise interest rates to control inflation, even when the broader economy isn’t firing on all cylinders.
Higher rates directly impact variable-rate mortgage holders, whose monthly payments rise when the central bank hikes the overnight rate. It also affects adjustable-rate mortgages, where both the interest and the total monthly payment fluctuate.
Even if you’re looking at fixed-rate options, lenders might price in this uncertainty by offering less competitive fixed rates—especially if bond markets become unstable.
According to Oxford Economics, a full-on tariff retaliation could reduce Canada’s GDP by 2.5% and push inflation up to 7.2% by 2026. That kind of environment puts intense upward pressure on borrowing costs.

Stricter Lending Standards Could Make Mortgages Harder to Get

When the economy turns uncertain, banks tend to tighten their lending rules. That means mortgage pre-approvals might get harder to come by, and borrowers with lower credit scores or small down payments may find themselves shut out.

Lenders could start asking for:

Higher credit scores
Larger down payments
More proof of stable income
Tighter debt-service ratios

So if you’re thinking of buying or refinancing, it’s better to get pre-approved sooner than later—while qualification rules are still more flexible.

Housing Affordability Could Take Another Hit

Canadians are already stretched by high housing prices and rising cost of living. Tariffs could make things worse.

If borrowing becomes more expensive and wages don’t keep up, we could see fewer first-time buyers entering the market, and more existing homeowners struggling with renewal “payment shock.” In fact, over 1.2 million Canadian mortgages are up for renewal in 2025, most of them originally signed when rates were closer to 2%.

Imagine going from a $1,800 mortgage payment to $2,500 overnight. For many households, that’s a recipe for financial strain. Acting early—by locking in a favourable rate now or refinancing before rates go up—can offer a buffer against that shock.

What Homeowners Should Do Right Now

If you’re holding a mortgage or about to get one, here’s how you can prepare:

1. Speak to a mortgage expert today. An experienced broker can help you understand how tariffs and interest rates could impact your financial situation—and recommend a product that balances flexibility and stability.
2. Consider locking in your rate. If you’re planning to buy or renew in the next few months, now might be your best chance to lock in a competitive rate before market volatility hits.
3. Evaluate your options carefully. Whether it’s a fixed or variable mortgage, choose the one that fits your income, risk appetite, and budget. Don’t default to the cheapest rate—look at the full product features and conditions.

Fixed or Variable: Which One Should You Choose?

Choosing between a fixed and variable mortgage is always a hot debate—but in uncertain times, the stakes get higher.

Fixed-Rate Mortgages

Fixed rates are perfect for homeowners who value predictability. You lock in your monthly payment for 3, 5, or even 10 years, which can offer peace of mind if inflation surges or rate hikes come quickly.

This is especially useful if your budget is tight or you’re renewing a mortgage that was initially signed during ultra-low interest rate periods.

Variable-Rate Mortgages

Variable rates can be cheaper upfront—but they also carry more risk. If you have the financial cushion to handle a potential rise in payments, this option could still save you money if rates stay relatively stable or drop in the longer term.

Just remember: a variable-rate mortgage can feel great when rates are flat—but a single BoC rate hike can add hundreds to your monthly payment.

Your decision should depend on your cash flow, risk tolerance, and how long you plan to stay in the home. And if you’re unsure, a hybrid option or a short-term fixed mortgage might give you flexibility without locking into today’s higher rates long-term.

FAQ: How Trump Tariffs Affect Canadian Mortgage Rates

Q: How do U.S. tariffs influence Canadian mortgage rates?
A: Tariffs increase the cost of imported goods, leading to higher inflation. The BoC may raise interest rates to control inflation, which raises borrowing costs for Canadian mortgage holders.

Q: Should I lock in a rate before tariffs take effect?
A: If you’re concerned about rising rates, locking in now could offer financial protection and peace of mind—especially if your mortgage is up for renewal in 2025.

Q: Could housing prices fall if mortgage costs rise?
A: Potentially, yes. Higher borrowing costs often reduce buyer demand, which can cool prices. But Canada’s housing market is also influenced by supply constraints, immigration, and local demand.

Q: Will lenders change their mortgage rules if tariffs hit?
A: Possibly. Lenders may tighten credit standards during economic uncertainty, making it harder to get approved unless you have strong financials.

Final Thoughts: Don’t Wait for Tariffs to Shake Up Your Mortgage

Tariffs may feel like a political sideshow, but they carry real consequences for your pocket—and your mortgage. Whether you’re renewing, refinancing, or buying your first home, the smartest move right now is to get ahead of the curve.

Don’t wait for rate hikes or stricter lending rules to make things harder. Speak with a mortgage expert now, lock in a rate while they’re still competitive, and protect yourself from future financial shocks.

In this economic climate, being proactive is the best mortgage strategy you can have. “And here’s how those ripple effects are hitting borrowers now.”

📞 Want to know how tariff threats could affect your next mortgage decision?
Talk to a licensed mortgage advisor today and get personalized guidance based on real market trends.

How Trump’s Tariffs Could Impact Mortgage Rates in Canada

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Understanding the Economic Risks of Tariffs