Why The Iran War is Making Mortgage Renewal feel like a ‘roller-coaster’

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As the Iran war raises oil and energy prices around the world, some experts are warning that additional stress may be on the way for Canadians looking to renew their mortgages this year.

The country is in the middle of a mortgage renewal wave, with the Canada Mortgage and Housing Corporation estimating that at least 1.5 million households had already renewed their mortgage by the end of 2025 and a million more are set to do so in 2026.

South of the border, mortgage rates are climbing, with the 30-year-fixed mortgage rate blowing past six per cent last week.

Generally, when investors fear inflation, that drives bond yields up and, in turn, raises mortgage rates.

“Once oil prices skyrocketed in reaction to hostilities in and around Iran, yields followed suit. This matters because lenders use bond yields to price their fixed mortgage rates,” said Clay Jarvis, NerdWallet Canada’s mortgage expert.

In Canada, fixed-rate mortgages have gone up slightly since the start of the war, said Dan Eisner, CEO of Calgary-based True North Mortgage.

“We’ve probably seen fixed rates go up by at least a quarter per cent right across the board from all the lenders,” he said.

Homeowners looking to renew their mortgage this year should be concerned about three and five-year government bond yields, Jarvis said.

“Three and five-year fixed rates edged up at a handful of lenders and brokerages over the last week or so, but not en masse and not to a nauseating degree,” he said, adding that many might still be able to find a mortgage under four per cent.

But the uncertainty around when the current crisis will abate is making it harder for households to plan their renewal, Eisner said.

“It’s like a roller-coaster. Every tweet [from politicians, including U.S. President Donald Trump] seems to move things,” he added.

As of Tuesday, the lowest five-year fixed mortgage rate in Canada was 3.69 per cent and the lowest five-year variable mortgage rate was 3.35 per cent, according to Canadian rate comparison platform Ratehub.

However, the uncertainty is likely to continue weighing on mortgage affordability.

“If the Bank of Canada now has to consider increasing interest rates, quarter of a percentage point or half a percentage point, you can bet that those are going to show up in mortgage rates,” said Concordia University economist Moshe Lander.

While lower oil prices would mean the threat of higher fixed rates would subside, the “unpredictability can make renewal negotiations even more fraught than usual,” Jarvis said.

Going in for a variable now, only to lock in a rate later when things settle down with oil prices, might not be the worst idea, Eisner said.

“You could always lock it in at no cost,” he said.

Mortgage debt is already straining a growing number of Canadian households, a recent report by Equifax Canada shows.

Canadians took on more mortgage debt last year, with the total debt hovering close to $2 trillion in 2025, the report shows.

Mortgage renewals continued to dominate the mortgage market in the fourth quarter, with total mortgage debt reaching $1.95 trillion, the report by Equifax Canada found.

Many households experienced “payment shock,” or a sudden increase in their monthly mortgage payments due to renewal. This prompted many to switch lenders, the report added.