Ask the Expert: What’s your Canadian mortgage strategy in Trump’s tariff war?

Make no mistake, we are in a war — an economic war. President Donald Trump has threatened, imposed, or temporarily reversed tariffs on just about every country in the world, including Canada.

Canada will now see a 25% tariff on aluminum, steel, Canadian automobiles and non-CUSMA-compliant traded goods.

The U.S. accounts for 75% of all Canada’s exports. As much we want to tough it out, some Canadians will find it tougher than others. Layoffs and job losses have already begun. My office has been contacted by clients asking for help after being laid off.

There's no point in sugar-coating it: We're in for a bit of a rough ride. But there are some things you can do to come out of this all right.

Does bad news for the economy mean good news for your mortgage rate?

Negative economic news has been rolling out over the past several weeks, such as inflation increasing to 2.6% in February from 1.9% in January, and the unemployment rate increasing to 6.7% over the same period, leaving another 36,000 people without a job. At this point, we have to stand back and look at what this means for interest rates and the housing market.

There's an old saying: Bad economic news means good news for mortgage rates. We had a slight deviation from this rule just two months ago as Trump began his second term , where the markets did not know how to react to the announced tariffs. Markets were very volatile.

But this old economic chestnut has now come back into play.

Fixed mortgage rates are priced from the government of Canada bond yields. The five-year government of Canada bond yields have dropped from their high of 3.27% on January 14, 2025 to a low 2.46% on April 4. This is the lowest level it has been since January 2022. Back then, five-year fixed mortgage rates were hovering around 3.59%. So, what looked like a flat line for mortgage rates this year just two months ago could tumble back down into this range yet again.

Variable rates, which are priced from the Bank of Canada overnight rate, will follow but not to the same degree. While they do appear to be coming down, there’s still a long way to go as today's bank prime rate is at 4.95%.

Advice on handling the next year

Here’s some advice you might want to follow over the next three to 12 months.

If you have a mortgage renewal coming up…

If you have a mortgage coming up for renewal, I highly recommend you speak with an unbiased mortgage broker where you can get a proper analysis to explore which mortgage products are best for you.

Mortgage qualifying and mortgage pricing has become more complicated than ever today as new government regulations and new bank requirements have made pricing mortgages very complex. Don't try and go it alone as this will most definitely result in you not turning over every stone to see what's possible for you.

Depending on your financial profile — your short- and long-term plans, your budget, your job security or insecurity — you may be well suited to a variable rate mortgage today with the plan or intention of locking into a fixed rate term over the next three to 12 months.

Or, you may want to just lock into a fixed mortgage rate today with the assurance of knowing what your payment is for the length of your term, whether it’s two, three to five years. This requires a discussion and understanding of the market

If you’re house-hunting…

This could be a good opportunity for you to find a good price and a more affordable mortgage as interest rates are falling. While I don't think the market will catch fire, I do think we'll see some activity as people always need to move for various reasons.

For those looking to upgrade or move up, this is definitely a good opportunity, as modestly priced homes will retain their value better than higher priced homes. Keep your eyes open, do some shopping and speak with your realtor to develop a strategy.

If you’re worried about your finances…

For those that are expecting or anticipating a potential layoff or job loss, you should immediately speak with your mortgage broker to set up some sort of contingency plan. Always have at least a six-month cash reserve to cover your expenses and living costs. Consider getting a secured line of credit or consolidate your debts today — If you have a job and good credit, it should be easy.

Note that house values are still higher than they were five years ago, and they can fall, which could impact your loan-to-value ratio. If they do, you're at risk of being able to qualify for that mortgage or secure line of credit. So, my message is: don't wait. Get a review and speak with your mortgage broker.

Lastly, consider whether a reverse mortgage is right for you. Reverse mortgages can be a helpful tool to be able to keep your home and live with dignity and comfort with low risk of repayment. I can’t tell you how many couples and clients of mine refuse to take advantage of this as they want to leave their adult kids something instead of enjoying the best years of their life.

That you will risk leaving anything to your inheritors by getting a reverse mortgage is an unfortunate misconception: Over time, your home will continue to appreciate beyond the amount that you withdraw, plus any interest accrued to your mortgage balance.

And for those who don’t fit in any of the above categories or have already lost their job: you need to contact an experienced mortgage broker to assess your options. Don’t wait. Waiting only makes things worse.

Catch up on Steve’s other columns:

• Ask the Expert: With the capital gains tax hike on its way out, is this your chance to buy an investment property?
• Ask the expert: How Trump’s tariffs will affect your Canadian mortgage
• Ask the Expert: Solutions for a flatlining condo market and new year predictions
• Ask the Expert: Steve Garganis on how the US impacts Canadian mortgage rates