Why Trade Tensions Could Matter to Your Mortgage, Even If Rates Are Falling
More Than Just Interest Rates
If you’ve been watching mortgage news lately, you’ve probably heard a lot about interest rates coming down. That’s good news — lower rates can mean smaller monthly payments and improved affordability for some buyers. But here’s the part many people don’t hear as often: interest rates aren’t the only thing influencing the housing market right now.
Behind the scenes, Canada’s trade relationship with the United States — especially around tariffs — is quietly affecting housing costs, mortgage pricing, and buyer confidence. Even if rates continue to ease, these broader economic forces can still shape what homes cost and how comfortable people feel making big financial decisions.
Why Trade Policy Affects Housing
Canada and the U.S. do a massive amount of business together. When trade between the two countries becomes uncertain, it can raise costs for everyday goods — including the materials used to build homes. Lumber, for example, is a major component of residential construction, and trade disputes in this area have historically pushed prices higher.
When building materials become more expensive, it costs more to build homes. That can slow down construction, reduce supply, or lead to higher prices for buyers. In simple terms, even if mortgage rates drop, homes themselves may not get cheaper if construction costs stay elevated.
Leadership and Economic Stability
These trade negotiations fall under the responsibility of Canada’s federal leadership, including Mark Carney. His challenge is to protect Canadian industries while also keeping the overall cost of living — including housing — from rising unnecessarily.
This balancing act matters to consumers because markets respond quickly to uncertainty. When investors and businesses feel unsure about the economic outlook, it can slow growth and make borrowing costs less predictable, even in a lower-rate environment.
How This Can Influence Mortgage Rates
Tariffs don’t directly change your mortgage rate, but they influence the factors that do. When trade tensions raise concerns about inflation or economic stability, financial markets can react by pushing long-term interest rates higher. Since fixed mortgage rates are closely tied to these market rates, borrowers may see changes in pricing that don’t always line up neatly with central bank announcements.
This is why mortgage rates can sometimes move even when the Bank of Canada hasn’t changed its policy rate. It’s not random — it’s the market reacting to broader economic risks.
Housing decisions aren’t just about numbers. They’re also about confidence. When people feel uncertain about the economy, job stability, or future costs, they tend to pause before making major commitments like buying or upgrading a home.
Trade uncertainty can contribute to that hesitation. Even buyers who technically qualify for a mortgage may decide to wait until things feel more predictable. This can slow down the market and make conditions feel uneven, with some areas moving quickly while others remain quiet.
What This Means for Buyers and Homeowners
For buyers, this environment means it’s important to look beyond headlines about rate cuts. Lower rates can help, but they don’t automatically guarantee lower home prices or a smooth market recovery. Understanding the bigger picture can help set realistic expectations and reduce stress during the buying process.
For homeowners, it’s a reminder that mortgage decisions should be based on long-term comfort, not just short-term rate movements. Economic conditions can shift, and planning with flexibility in mind is often more important than trying to time the market perfectly.
The Bottom Line
Interest rate relief has been helpful, but it’s only one piece of the puzzle. Trade policy, construction costs, and economic confidence all play meaningful roles in shaping housing affordability. As Canada navigates its relationship with the U.S., these factors will continue to influence how the housing market evolves.
The good news is that informed decisions tend to be better decisions. Whether you’re buying, renewing, or simply planning ahead, understanding how these forces connect can help you move forward with more clarity and confidence — even in an uncertain market.}
Level Up Mortgages is a mortgage broker team focused on helping the self employed, new immigrants, non-residents, and investors, access best rate and alternative lending in Canada. We have been nominated for best up and coming broker in Canada in 2021 and have been on CTV News and various publications because of our education-first approach to helping you always stay a step ahead of the process. Reach out to us for access to our first-time buyer course or a mortgage strategy session.
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Paul Davidescu (www.levelupmortgages.com)
Level Up Mortgages
604-809-3188
paul@levelupmortgages.com
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