Which Mortgage Rate Should You Lock In If Global Inflation Comes Roaring Back in 2025?

With global tariff threats heating up and bond markets reacting, many Canadians are asking a timely question:
Should I lock in my mortgage rate now — and for how long?

As former U.S. President Donald Trump proposes sweeping tariffs on Asia, global markets are signaling a potential return of inflation. And for Canadian borrowers, that could mean mortgage rates staying higher for longer.

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What’s Triggering the Concern?

The proposed tariffs — including a 25% duty on imports from Japan, South Korea, Taiwan, and India — are rattling global supply chains. If enacted, they could raise the cost of goods, spark import inflation, and influence interest rate decisions worldwide.

“With Trump triggering a new wave of global tariffs, fixed rates may become safer again.”

The Bank of Canada had been widely expected to cut interest rates in late summer or fall. But if inflation starts creeping up again due to trade shocks, the BoC may delay further cuts.

That leaves borrowers facing a familiar fork in the road: fixed vs. variable — and 3-year vs. 5-year terms.

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How to Decide Between 3-Year and 5-Year Fixed Rates

3-Year Fixed:

• Ideal if you believe rates will come down by 2026
• Offers flexibility to refinance sooner
• Rates are typically slightly lower than 5-year terms today

5-Year Fixed:

• Safer if you fear inflation or BoC delays
• Locks your payment for the long term
• Protects against market volatility or global supply chain shocks

“If you’re looking for peace of mind, the 5-year fixed remains a popular option — especially if tariff-driven inflation pressures grow.”

Final Thoughts

If global inflation makes a comeback, it could throw cold water on rate cut hopes — and stretch this high-rate era even longer than expected.

Choosing a mortgage term isn’t just about the rate today. It’s about how much risk you’re comfortable carrying, how soon you might need flexibility, and how much certainty you want.

Lock in smart. Lock in early. And do it with a plan.