Fixed Mortgage Rates Poised to Rise Amid Tariff War Uncertainty

Despite expectations of a held benchmark interest rate by the Bank of Canada on Wednesday, fixed mortgage rates are poised to rise. Economists point to rising Government of Canada bond yields and US Treasury yields as the primary drivers of this increase.

Sherry Cooper, chief economist at Dominion Lending Centres Group, notes that bond market jitters in the US could impact Canada's rate outlook. 'Another question mark is interest rates and market-driven interest rates,' she said.

Concerns about higher inflation have grown in Canada and the US, driven by the war in Iran and oil price increases. The Canada/US tariff war will result in higher prices across a range of goods in both countries that will be absorbed by consumers.

'It's just a very dicey scenario,' Micky Khaneka, a Toronto-based mortgage broker, said. 'If the tariffs keep continuing to push costs, it will eventually lead to higher inflation, which would then eventually put upward pressure on bond yields, then pushing fixed rates higher.'