” The recent market has seen an uptick in those mortgage types”
”It’s still anyone’s guess as to whether the Bank of Canada will hike or cut its policy rate in the coming months – and Canadian borrowers appear increasingly open to taking out shorter-term, fixed-rate mortgages in that uncertain climate.”
”New data from Ratehub.ca showed that searches on its site for fixed-rate options of between one and four years have leapt from 6% in 2022 to 14% so far this year, although unsurprisingly five-year fixed rate options account for the bulk of inquiries to date in 2023 (79%, up from 66% last year).”
”When the central bank slashed its benchmark interest rate at the onset of the COVID-19 pandemic, variable rates plummeted and borrowers surged towards those options as a result.”
”However, that benchmark rate has spiked by 4.25% since March 2022 – and interest in variable rates has plunged, with only 5% of all rate inquiries to Ratehub concerning five-year variables.”
”Canada’s mortgage agent and broker community has also reported a recent uptick in interest for shorter-term fixed mortgage rates among clients.”
”…fixed-term options of around three years allowed borrowers to avoid the shock of potential further Bank of Canada hikes in 2023 and avail of lower rates sooner if the central bank decides to cut, as expected, when inflation returns to its target rate.”
”Now I’m seeing a lot more [choosing] shorter-term than going five-year fixed. Even if you’re paying prime minus one and you’re at 5.7%, you might as well lock in at 4.6% on a three-year and wait until rates kind of start shifting and we get an indication from the Bank of Canada as to the direction of where they’re going to take rates. ”
Source: To read the full article published on the Canadian Mortgage Professional (CMP) website click the link HERE
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