On the surface, an oil pipeline reopening overseas may not seem connected to your mortgage renewal in Ontario. But the resumption of crude oil exports from Iraqi Kurdistan to Turkey is a small signal in a much bigger picture—one tied directly to inflation, interest rates, and ultimately, Canadian homeowners’ wallets.
This weekend, after an 18-month halt, oil started flowing again from northern Iraq through Turkey. That development isn’t just a win for energy market stability; it could also help slow rising costs worldwide—including here in Canada. Energy prices feed into inflation, and inflation influences the Bank of Canada’s rate decisions. In a landscape where mortgage renewals are already squeezing budgets, even small global changes can impact how much we pay for our homes.
So, What Does Oil Have To Do With Your Mortgage?
Canada doesn’t import oil from Iraqi Kurdistan, but oil is a global commodity. When supply is restricted anywhere—due to conflict, sanctions, or in this case, diplomatic gridlock elsewhere—prices climb everywhere. That’s what’s happened over the past year, with energy prices helping push Canadian inflation above the Bank of Canada’s 2% target.
In August, Statistics Canada reported that headline inflation jumped to 4%, with gasoline prices accounting for a significant chunk of that rise. If this renewed supply from Kurdistan is maintained, we may see some pressure ease off global energy markets. That includes Canada, where lower fuel prices could soften inflationary momentum. Lower inflation makes it more likely for the Bank of Canada to pause or even lower interest rates—critical news for current and aspiring homeowners.
For Canadians on a variable rate mortgage, these decisions matter month to month. For those shopping for their next home or locking in a new loan, it impacts how much house you can afford.
Homeowners Are Already Feeling the Squeeze
Over the past 18 months, Canadian mortgage holders have watched rates climb steeply. According to the Bank of Canada, the average Canadian five-year fixed rate rose from around 2.25% in early 2022 to over 5.5% today. That’s an extra $600 or more per month on a $500,000 mortgage—and it’s one reason why home sales are slowing down across the country.
The Canadian Real Estate Association (CREA) reported that national home sales dropped by 4.1% in August compared to July. Many buyers are simply priced out, while others are hesitant to lock in at what might be peak rates. Sellers, too, are holding back, waiting for more favourable financing conditions before listing their homes. This ‘wait-and-see’ approach is contributing to sluggish movement in the market. That’s why any sign of easing inflation—like oil prices coming off their highs—is being watched closely.
If the Bank of Canada feels confident that inflation is trending down, they may hold back on additional rate hikes—or consider trimming rates in early 2024. That would ease the financial burden for many of us, especially those considering a refinance before their renewal date hits.
How Long Will This Last?
The elephant in the room is stability—or lack of it. While the pipeline reopening is promising, it’s still on shaky legs. The agreement between the Kurdistan Regional Government, Iraq’s federal government, Turkey, and an assorted group of international players was hard-fought. And it could unravel just as quickly. Political instability in the region is ever-present and one disagreement could stop oil deliveries again, nudging prices back up.
From a mortgage planning perspective, that’s why it’s important to approach potential rate relief with cautious optimism. If energy supplies remain steady and inflation trends lower, the second half of 2024 could present better borrowing conditions. This would be welcome news for those eyeing construction mortgages or planning major home renovations in the spring.
But if global tensions flare again, we could find ourselves back where we were: rising prices, stubborn inflation, and central banks forced to keep rates higher for longer.
What Should Canadian Homeowners Do Now?
Markets are unpredictable—but your response doesn’t have to be. If your mortgage is set for renewal in the next 12 to 18 months, don’t wait until rates fall. Start planning now. Assess your budget, explore HELOC options, and lock in terms that offer flexibility. With the right strategy, you can shield yourself from rate uncertainty—no matter what global markets are doing.
Use tools like our mortgage calculator to run the numbers and stress-test your budget. And don’t go it alone—an experienced broker can help you compare the best mortgage rates tailored to your unique goals.
A return to global oil supply stability may offer hope for interest rate relief. But as Canadians navigating a complex housing and lending market, we need more than hope—we need clear-eyed strategy and support.
At Unrate, we’re here to help you make sense of every shift in the market, and turn uncertainty into opportunity. Whether you’re renewing, relocating, or just trying to stay ahead of rising costs, now’s the time to be proactive.
Want to talk strategy? Reach out today to explore your options and make confident mortgage decisions, no matter which way the global winds blow.
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