How Peace in the Middle East Could Lower Your Mortgage Rate (and What Toronto’s Market Is Really Telling Us)

https://www.youtube.com/watch?v=a1rWT58ZxWg

There is a thread that runs from a ceasefire on the other side of the world straight into your mortgage payment here in Ontario. It sounds like a stretch until you follow the money. I sat down with my good friend and go-to mortgage broker, Dion Beg, to trace that line and then pull back and look at where the Toronto real estate market really sits halfway through 2026.

If you have been hearing that homes are taking forever to sell and that inventory is piling up, this one is for you. The headlines and the actual data are telling two different stories, and the gap between them is where the opportunity lives.

The chain reaction: from a ceasefire to your fixed rate

When news of peace and a ceasefire in the Middle East came through, the price of oil dropped back to roughly $80 a barrel. That is the same level it sat at before the conflict started. On its own that sounds like a line item on the news. It is actually the first domino.

Here is how Dion walked me through it. Stability in that region gives the rest of the world a little more peace of mind about the cost of energy. Oil touches the price of everything that gets shipped anywhere, so when oil settles, inflationary pressure eases off for now. That matters to you because of what inflation does next.

Lower inflation pressure feeds into bond yields. Bond yields drive fixed mortgage rates. So the logic right now is that fixed rates have room to come down, simply because there is a bit more certainty in the world about what energy is going to cost. Assuming things hold over there, Dion expects we should be heading into a better interest rate environment.

My opinion: do not read that as "rates are about to fall off a cliff," because that is not what either of us is saying. Read it as one less weight on the scale. And in this market, removing weight from the scale is exactly what we have been waiting for.

Why a better rate environment matters even if you are not buying yet

A better rate environment does something quieter than just lowering payments. It builds confidence.

Consumer confidence is not only about real estate. It is the feeling that lets someone walk into a grocery store, buy furniture, update their home, and yes, eventually buy or sell property without that knot in their stomach. It has a ripple effect across the whole economy. Nobody flips a switch and decides to buy a house because oil dropped two dollars. But the mood shifts, and the mood is what has been missing.

To be clear, the world’s problems are not solved. We still have plenty to keep an eye on. But if we can take one item off the worry list when people are making big decisions, that is good news.

The history lesson: where Toronto actually sits in 2026

This is the part I love, because it is where feelings and facts stop agreeing with each other. I pulled up the public stats and Dion and I did our usual gut check, looking at the market from the 50,000 foot view instead of the panic view of what happened this week.

Days on market: closer to normal than you think

Single detached median days on market in 2026 is hovering around 20 to 22 days. Now, if your home has been listed longer than that, I get it, this is a median across the entire Toronto Real Estate Board, not your street. But step back and compare it to what Dion and I would call normal times, like 2018 and 2019. We are not much higher than those years.

What stood out to both of us is which years actually had the longest days on market. The early 2000s, which traces back to the dot-com bubble bursting, and 2008 to 2009, the global financial crisis. We are nowhere near that territory today. We are roughly average, maybe slightly above. That is a very different picture than "the market is broken."

Median price: we are sitting below the trend line

When I draw a trend line through detached median prices over the long run, we are sitting below it right now. Dion made the key point here: that gap is driven by affordability, not by a lack of desire to buy. People want in. The math of affordability is the wall they keep hitting.

History says that wall does not always come down quickly. Through the 1990s, prices stayed below the trend line for nearly a decade. So when people ask when we get back to the 1.6 million dollar price point we saw in the craziness of 2022, my honest answer is the same as Dion’s: do not bet on tomorrow. A lot of the bank economists, Benjamin Tal among them, have talked about Toronto not returning to that number until 2030 or beyond.

Here is the part that should make you sit up. We are halfway through 2026. 2030 is only about three and a half years away. If you bought near the peak, getting back to that value might fe

el like a long wait. If you are looking to buy, it reframes the whole conversation.

Refinances are exposing the equity gap

Dion is fielding calls right now from people he has never met, reaching out to refinance. The timing tells the story. A lot of them bought in 2021 and are hitting their five-year mark in 2026, hoping to roll a car payment or credit card balance into the mortgage. The problem is the equity often is not there, because today’s value can sit a little below what they paid. They cannot consolidate the way they planned.

That is the real-world version of a statistic. The era where you bought a property and it climbed a hundred grand a year, guaranteed, is behind us. Those days are long behind us.

The condo story: from commodity back to fair value

I put the condo apartment median price chart up next, and we land at or just below the trend line. My read is that condos are sitting at fair market value right now. Some will say that is too much, some will say not enough, but fair is fair.

For years, condo prices were inflated, and there were two reasons. First, detached homes got so expensive that buyers who were priced out flooded into the condo market, and there were more buyers than the inventory could sustain. Second, and this is Dion’s point, condos became a commodity, almost like a stock. People were buying purely to sell at a higher price, and a lot of them got caught in that speculative mindset. The investors have largely abandoned that market now.

The under-supply nobody is talking about yet

Here is where it gets interesting for anyone thinking three to four years out. Builders are putting off projects right now because buyer interest is soft. That feels logical. But housing is what economists call an inelastic asset. If you want a property today that does not exist today, it cannot be produced by tomorrow. It takes three to five years.

So picture this. Builders wait for the market to start asking for more condos, and they will probably wait a little longer than they should. Meanwhile a backlog of buyers builds. Three to four years from now, those buyers go looking and the inventory may not be there, because the projects got shelved today. It seems almost impossible to imagine an under-supply problem when you look at the volume of condos available right now. But based on the delays builders are imposing on themselves, it is a real possibility. That is a real estate cycle worth keeping your eye on.

Months of inventory: read your local market, not the headline

Months of inventory is the other indicator Dion and I lean on. Said simply: if no other homes came up for sale, how long would it take to sell everything currently listed?

For single detached, we are hovering just above four months. Slightly higher than average, yes. But compare it to the spike in late 2008, the fourth quarter of that financial crisis, and it is nothing like that. On the street it feels heavier than the graph looks, and I understand why. But the data does not support panic.

This is where most people get tripped up. The general rule you hear quoted is that under three months is a seller’s market, three to five or six months is balanced, and above that is a buyer’s market. That rule is a generality, almost a North America wide average. It is not your market.

My opinion: you have to know your local market. When I look at the Toronto data going back to the first quarter of 2000, the long-run average is closer to two months.

So a more honest local read for Toronto is something like this:

• Under about a month and a half to two months: seller’s market

• Roughly two to four months: balanced market

• Above four months: buyer’s market

  
  

By that local measure, sitting just above four months explains exactly why it feels like buyers are in control right now, because they largely are. And if you watch the last couple of quarters, months of inventory is actually stepping down. Dion’s read on that, and I agree, is seller capitulation. The seller who held out for 1.2 million while the market said one million has finally accepted reality and sold. That is what moves the number.

Two client stories that show what real estate is really for

Dion shared two stories that stuck with me, because they cut through the stats and show what this is all actually about.

The first surprised even me. In any given year, financial professionals who work at the banks, the underwriters and lenders, will reach out to Dion for their own personal mortgage or for their kids. In this case a longtime underwriter at a major institution, someone who deals with dozens of brokerages and hundreds of brokers, sent her own daughter to Dion to secure a mortgage on her first pre-construction purchase. They are closing shortly. When someone who could pick anyone trusts you with their family, that says everything about how you do the work. I will add that I have had Dion handle my own mortgages more than once, so I am one of those clients too.

The second is the one I want you to remember. About ten years ago Dion helped a gentleman up in Thunder Bay and his business partner buy multiple properties, now student rentals near the universities up there. He is a couple of weeks from retirement. He has a solid OPP pension coming, and on top of it, a couple of million dollars in real estate to draw on. As Dion put it, it is nice to retire with a good pension and a backup like that. So many of his clients are police officers, nurses and teachers heading into a 50 to 80 thousand dollar pension, who wanted a cushion of other assets on top. That cushion is what funds the hundred thousand dollar trip or the down payment gift to a kid without touching their own retirement.

Plant seeds early, reap them later. After enough years in this business, I am not going to call us old, I will call us seasoned, you actually get to watch the plans from ten plus years ago come to fruition. This is not theory. It is tangible, and it is happening for real people right now.

What this means for you

Pull it together and here is the takeaway. A ceasefire abroad is easing oil and inflation pressure, which gives fixed mortgage rates room to come down and slowly rebuilds buyer confidence. Meanwhile the Toronto market, despite how it feels, is sitting much closer to normal than the panic suggests, with prices below the long-run trend line on an affordability story rather than a demand story. Condos are back to fair value, and a builder slowdown today could set up a supply squeeze a few years out.

If you are wondering what all of this means for your specific situation, whether to buy, sell, refinance, or just wait, that is the conversation Dion and I have every day. Reach out and we will walk you through the numbers for your home, your neighbourhood and your goals. The stats are public. Knowing what they mean for you is the part worth talking about.

You can reach Dion Beg at King of Mortgage, or on Instagram at @thedionbeg. I’m Gary McGowan, and I’ll see you in the next video.

This is general market commentary, not financial or mortgage advice. For guidance specific to your situation, talk to a licensed mortgage professional.