Mortgage Rate Forecast (March 2026)

How Geopolitics Is Shaping Mortgage Rates in 2026

After trending downward through most of February, both Canadian and U.S. bond markets have shifted course in response to rising geopolitical tensions tied to the Iran conflict. Investors have grown increasingly cautious, pushing five-year bond yields back up to levels last seen near the end of 2025.

This shift matters—because bond yields play a major role in determining fixed mortgage rates.

Fixed Mortgage Rates: A Rebound After Early Declines

Earlier this year, fixed mortgage rates were easing. But that trend has reversed. As volatility in global markets has increased, fixed rates have followed suit.

Currently, uninsured five-year fixed mortgage rates have stabilized around 4.6%, reflecting the rise in five-year bond yields, which have now climbed above 3%.

Looking ahead, there’s a strong possibility that fixed rates could edge slightly higher in the next quarter. Why? Markets are beginning to factor in:

• A potential monetary policy response
• Rising oil prices
• Increased risk premiums due to global uncertainty

All eyes are now on the Bank of Canada’s upcoming April meeting. Their guidance will be critical. If policymakers signal that they’re willing to look through temporary inflation spikes, we could see some moderation in fixed rates. Otherwise, upward pressure may continue.

Variable Rates: Holding Steady—for Now

On the variable side, things have been much calmer.

Following three consecutive rate holds by the Bank of Canada, variable mortgage rates have remained stable. The average rate currently sits around 4.1%, roughly 35 basis points below the prime rate.

However, this stability doesn’t mean change isn’t coming—it just means lenders are waiting.

Given the current environment of heightened uncertainty, lenders are unlikely to significantly adjust their discounts on variable rates. Instead, future movements will depend heavily on:

• How long oil prices remain elevated
• The broader economic impact of geopolitical tensions
• The Bank of Canada’s rate decisions

What This Means for Buyers and Homeowners

In today’s environment, mortgage rates are being influenced by more than just domestic economic data—they’re reacting to global events in real time.

• Fixed rates may continue to rise modestly in the short term
• Variable rates remain steady but are highly dependent on future rate decisions

For buyers and homeowners, this means staying informed is more important than ever. The next few months could bring meaningful shifts, especially depending on how central banks respond to inflation and global risk.