Vast majority now favour fixed-rate mortgages
While it looks like interest rates will remain low for some time, there has been a large swing from variable to fixed-rate mortgages over the past year.
According to a recently released report from the Canadian Association of Accredited Mortgage Professionals (CAAMP,) 79% of all new mortgages taken out this year have been fixed-rate. A mere 10% were variable, and 11% are a blend of the two.
With today's mortgage rates hovering around the 3% mark, it makes sense for Canadians to lock in a mortgage rate for 5 or 10 years rather than taking a fluctuating variable rate. Variable mortgage rates are connected to the lender's prime rate, which for the most part are near the 3% mark. According to the report, the average mortgage rate now sits at 3.55%, a significant decrease from last year, when it was 3.94%.
The report, based on an online survey, also found that 87% of Canadians have at least 25% equity in their homes, and many Canadians are increasing mortgage payments or making lump sum contributions to decrease their mortgages faster.
For more information about choosing between a fixed or variable rate mortgage, talk to an Ottawa Mortgage Broker.