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Mortgage charges and investing are extra linked than they first seem. When charges keep excessive, households have much less room within the price range, housing exercise can cool, and buyers often cease chasing the riskiest names. That shifts consideration towards companies with sturdy earnings, robust stability sheets, and fashions that may nonetheless work when borrowing prices keep annoying for longer.

The Financial institution of Canada held its coverage charge at 2.25% on March 18, whereas CMHC mentioned fastened mortgage charges might stay elevated as long-term bond yields stay agency, so that is nonetheless a really actual backdrop for Canadian buyers. With that in thoughts, the place ought to buyers, properly, make investments?

FFH

Fairfax Monetary (TSX:FFH) is a property and casualty insurer and funding holding firm, so not tied to dwelling gross sales in the identical direct method as many lenders or actual property names. If mortgage charges keep excessive and the financial system turns uneven, Fairfax can nonetheless lean on underwriting earnings, funding earnings, and its broad assortment of companies. During the last 12 months, it additionally stayed busy on the capital allocation entrance, together with a deal to promote a part of its Poseidon stake for about US$1.9 billion, which provides it much more flexibility.

Fairfax reported 2025 web earnings of US$4.8 billion, or US$213.78 per diluted share, up from US$3.9 billion in 2024. Guide worth per fundamental share reached US$1,260.19 at year-end 2025, up 20.5% adjusted for the dividend, and the Canadian inventory referred to as 2025 the most effective 12 months in its historical past. Gross premiums written rose to US$33.6 billion, whereas report underwriting revenue and robust funding good points did a whole lot of the heavy lifting.

The valuation nonetheless seems to be affordable for what buyers are getting. The Canadian inventory traded at about 8 instances trailing earnings and round 1.4 instances ebook worth. That isn’t a giveaway after a powerful run, nevertheless it nonetheless seems to be honest for a Canadian inventory with diversified earnings and a administration group that tends to remain disciplined when markets get bizarre. The chance is that insurance coverage pricing has began to melt in some areas, so Fairfax could not get the identical tailwind from premiums that it loved earlier within the cycle. Even so, if mortgage charges keep excessive and buyers need resilience, Fairfax seems to be like a wise match.

EQB

EQB (TSX:EQB) is the extra direct mortgage-rate thought, and that makes it attention-grabbing. It’s Canada’s Challenger Financial institution, with a giant presence in different mortgages, industrial lending, and digital banking by EQ Financial institution. If charges keep excessive somewhat than spike wildly, EQB can nonetheless profit from disciplined lending, wholesome spreads, and clients on the lookout for options outdoors the largest banks. During the last 12 months, it additionally made a notable transfer with its PC Monetary partnership, which helped spherical out its product lineup and widened its attain.

In first-quarter 2026, EQB reported adjusted web earnings of $85.2 million and adjusted diluted earnings per share of $2.26. Adjusted return on fairness was 11.1%, whereas adjusted income held regular at $306.8 million. These numbers had been down from a 12 months in the past, however improved properly from the prior quarter. For full-year 2025, EQB additionally raised its dividend and saved shopping for again shares, which indicators confidence from administration.

On valuation, EQB exhibits a trailing annual dividend yield close to 2%, and third-party market information places the inventory at roughly 18 instances trailing earnings, which isn’t particularly low-cost for a lender dealing with a higher-rate housing market. That mentioned, EQB shouldn’t be attempting to be a sleepy financial institution. It’s nonetheless rising, nonetheless taking share, and nonetheless arguing {that a} extra stage regulatory taking part in discipline might unlock extra upside. The apparent threat is that prime mortgage charges ultimately hit borrower demand or credit score high quality more durable than anticipated. But when charges merely keep excessive and the housing market muddles by, EQB might preserve stunning buyers.

Backside line

If mortgage charges keep excessive, I might not construct a watchlist round hope. I might search for companies that may deal with strain and nonetheless produce. Fairfax brings diversification, robust underwriting, and a wise valuation. EQB brings a extra direct lending angle with room to develop if it retains executing. They’re very totally different Canadian shares, however each look constructed for a market the place costly cash sticks round longer than anybody would really like.