2 Canadian Stocks to Buy if Mortgage Rates Stay High

High mortgage rates can squeeze consumers and cool housing, so these two TSX stocks are framed as ways to stay resilient without betting on a quick rate relief rally.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 23, 11:45 am EDT

| More on: EQBFFH

Key Points

When rates stay high, investors often favour durable earnings, strong balance sheets, and disciplined capital allocation.
Fairfax can benefit from underwriting and investment income even in a choppy economy, and it still looks reasonably valued.
EQB is a more direct rate-and-housing play, with growth potential but higher credit and demand risk if borrowers strain.

Mortgage rates and investing are more connected than they first appear. When rates stay high, households have less room in the budget, housing activity can cool, and investors usually stop chasing the riskiest names. That shifts attention toward businesses with durable earnings, strong balance sheets, and models that can still work when borrowing costs stay annoying for longer.

The Bank of Canada held its policy rate at 2.25% on March 18, while CMHC said fixed mortgage rates could remain elevated as long-term bond yields remain firm, so this is still a very real backdrop for Canadian investors. With that in mind, where should investors, well, invest?

Real estate investment concept with person pointing on growth graph and coin stacking to get profit from property — Source: Getty Images

FFH

Fairfax Financial (TSX:FFH) is a property and casualty insurer and investment holding company, so not tied to home sales in the same direct way as many lenders or real estate names. If mortgage rates stay high and the economy turns choppy, Fairfax can still lean on underwriting income, investment income, and its broad collection of businesses. Over the last year, it also stayed busy on the capital allocation front, including a deal to sell part of its Poseidon stake for about US$1.9 billion, which gives it even more flexibility.

Fairfax reported 2025 net earnings of US$4.8 billion, or US$213.78 per diluted share, up from US$3.9 billion in 2024. Book value per basic share reached US$1,260.19 at year-end 2025, up 20.5% adjusted for the dividend, and the Canadian stock called 2025 the best year in its history. Gross premiums written rose to US$33.6 billion, while record underwriting profit and strong investment gains did a lot of the heavy lifting.

The valuation still looks reasonable for what investors are getting. The Canadian stock traded at about 8 times trailing earnings and around 1.4 times book value. That is not a giveaway after a strong run, but it still looks fair for a Canadian stock with diversified earnings and a management team that tends to stay disciplined when markets get weird. The risk is that insurance pricing has started to soften in some areas, so Fairfax may not get the same tailwind from premiums that it enjoyed earlier in the cycle. Even so, if mortgage rates stay high and investors want resilience, Fairfax looks like a smart fit.

EQB

EQB (TSX:EQB) is the more direct mortgage-rate idea, and that makes it interesting. It is Canada’s Challenger Bank, with a big presence in alternative mortgages, commercial lending, and digital banking through EQ Bank. If rates stay high rather than spike wildly, EQB can still benefit from disciplined lending, healthy spreads, and customers looking for alternatives outside the biggest banks. Over the last year, it also made a notable move with its PC Financial partnership, which helped round out its product lineup and widened its reach.

In first-quarter 2026, EQB reported adjusted net income of $85.2 million and adjusted diluted earnings per share of $2.26. Adjusted return on equity was 11.1%, while adjusted revenue held steady at $306.8 million. Those numbers were down from a year ago, but improved nicely from the prior quarter. For full-year 2025, EQB also raised its dividend and kept buying back shares, which signals confidence from management.

On valuation, EQB shows a trailing annual dividend yield near 2%, and third-party market data puts the stock at roughly 18 times trailing earnings, which is not especially cheap for a lender facing a higher-rate housing market. That said, EQB is not trying to be a sleepy bank. It is still growing, still taking share, and still arguing that a more level regulatory playing field could unlock more upside. The obvious risk is that high mortgage rates eventually hit borrower demand or credit quality harder than expected. But if rates simply stay high and the housing market muddles through, EQB could keep surprising investors.

Bottom line

If mortgage rates stay high, I would not build a watchlist around hope. I would look for businesses that can handle pressure and still produce. Fairfax brings diversification, strong underwriting, and a sensible valuation. EQB brings a more direct lending angle with room to grow if it keeps executing. They are very different Canadian stocks, but both look built for a market where expensive money sticks around longer than anyone would like.