An action plan for mortgages, stocks and other wartime personal finance risks
Talk to your lender now if you’re renewing to find out how soon you can lock in a rate.marchmeena29/iStockPhoto / Getty Images
It’s week two of the Iran war and the outlook for our personal finances gets more tense by the day.
Gasoline prices are streaking higher, stocks keep falling, inflation risks are rising and, suddenly, there’s upward pressure on fixed-rate mortgage costs. Here are some things to do right now to protect your finances:
Lock in a mortgage rate:
Many people who bought homes in the pandemic real estate boom will renew their mortgages in 2026. Talk to your lender now if you’re renewing to find out how soon you can lock in a rate. It’s usually possible to get a rate hold for up to 120 days.
Until the Iran war, mortgage rates were the picture of zero-drama stability. Now, financial market uncertainty is starting to put upward pressure on fixed-rate mortgage costs.
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It all starts in the bond market, which helps set the tone for fixed-rate mortgage costs. Right now, there’s growing concern in the bond market that soaring oil prices will fuel inflation. Inflation worries are already depressing bond prices, which in turn means higher bond yields. Whatever bond prices do, the interest rate on bonds goes in the opposite direction.
Variable-rate mortgages are directly influenced by the Bank of Canada’s overnight rate, which isn’t expected to change any time soon unless inflation gallops ahead or the economy falls into recession. You save a bit with variable-rate mortgages right now compared to the popular three- and five-year fixed terms, but you’ll need to stay alert to the impact of world events on interest rates here in Canada.
Get back into the ‘gas is expensive’ mindset:
We had a gasoline price spike four years ago after Russia’s attack on Ukraine and a lot of attention was paid to minimizing the cost of driving. GasBuddy.com says the average gas price across Canada in spring 2022 was about $2.10 per litre, compared to about $1.55 now. But at the beginning of the year, we averaged bit over $1.20.
Prices at the pump have reacted almost in real time to surges in the price of crude oil, which means delaying a fill-up can cost you big time. A suggestion: Drive off the top half of your gas tank. Fill up frequently so you don’t have an empty tank on your hands after a big jump in gas prices.
GasBuddy is a useful tool for seeking out the lowest gas prices and you can use it on your computer or by mobile app. Royal Bank of Canada clients can save three cents a litre at Petro-Canada stations by using a client card linked to a Petro-Points account to pay, and CAA members can save three cents at Shell stations.
Seize the moment for sizing up your stocks:
Stocks have weakened lately, but the declines were orderly and panic-free as of Monday morning. Canada’s benchmark S&P/TSX composite index was still up about 2 per cent for the year and the S&P 500 was off about 2.7 per cent. Nothing too bad has happened in stocks – so far.
If you haven’t done so already, ensure you’re well diversified in your stock market exposure, and that you have bonds, guaranteed investment certificates or cash on hand to offset falling stocks. As noted above, bonds look vulnerable to declines of their own right now. But the worst of bonds is far better than the worst of stocks.
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Prepare your RRIF:
On the chance that stocks plunge, make sure you have enough cash in your registered retirement income fund to cover your mandatory 2026 withdrawal. While you’re at it, see if you have enough cash for your 2027 and 2028 withdrawals as well.
This cash won’t earn you much more than about 1.8 to 2.3 per cent currently, depending on what type of parking spot you use for your cash, but it will save you from having to sell hard-hit stocks or equity funds to make a RRIF withdrawal.
Do not depend on the federal government to reduce the mandatory minimum withdrawal amount if stocks fall hard. The Liberal government promised to reduce the 2025 minimum by 25 per cent when the trade war flared a year or so ago, and then backtracked after stocks rebounded nicely.
Rob Carrick is a personal finance expert and former Globe and Mail staff columnist.
