The Big Story: Fixed-rate mortgage shift
It wasn’t too long ago that the prevailing wisdom held that variable-rate mortgages were the way to go. Now, a recent poll reveals that fully half of all Canadians said they would choose a fixed rate mortgage if they had to decide today, a 10 per cent increase from a year ago. That’s a huge shift from the past five years, when people saved money by sticking with variable rates. Brokers can certainly attest to this trend, and say they are seeing clients choose longer term mortgages with rates at historic lows. They are also recommending that clients go with as long a term as possible, event 10-years, as rates haven’t been this low in 20 years. This week we spoke with Catherine Evel, mortgage broker/owner and mortgage agents Kelly Sams and Julia Parkin at Dominion Lending Centres-Homestead Financial. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.
Video transcript below:
John Tenpenny, Mortgage Broker News TV
John Tenpenny: Hi, I’m John Tenpenny, editor of CMP magazine and welcome to the Big Story on Mortgage Broker News TV.
My, how times have changed, it wasn’t too long ago that the prevailing wisdom held that variable rate mortgages were the way to go. Now a poll reveals that fully 50% of Canadians would choose a fixed rate mortgage today if they had to decide. That’s a 10% increase over a year ago. Brokers can certainly attest of this trend and say they’re seeing clients choose longer term mortgages with rates at historic lows. They’re also advising clients to take as long a term as possible even 10 years, as rates haven’t been this low in 20 years.
Catherine Evel, Broker Owner, Dominion Lending Centres, Homestead Financial
Catherine Evel: Yeah, fine absolutely, I’m seeing more and more clients choosing the fixed rate strategy, whether it’s the 3 year, 5 year or even a 10 year term, the fixed rate terms are definitely is being chosen these days. So right now rates are at an all time low, a 50 year low and historically the five year fixed rate discounted has been at about 5% over the years, so choosing a fixed rate mortgage at the low low rates is an excellent way to go.
Kelly Sams, Agent, Dominion Lending Centres, Homestead Financial
Kelly Sams: We are absolutely seeing our clients go with the fixed rate term. The mortgage rates are at historic lows and really best for most clients to go with the fixed rate. Having said that, we are also recommending that clients go for as long as possible and keeping a long term mortgage.
John Tenpenny: Brokers also say the longer fixed rate mortgages are great for self employed home owners, because they want to know what they pay in each month and they can also increase payments to keep pace with inflation.
Julia Parkin, Agent, Dominion Lending Centres, Homestead Financial
Julia Parkin: I am seeing most clients go with fixed rate mortgages and the longer term fixed rate mortgages. So between 7 and 10 year terms and I think it’s great because people that are in business for themselves, income that fluctuates, they want to know what their payments are going to be in the future, so what we do is place them into 10 year term rate mortgages and then increase their payments with inflation, so that they are right in line with where other rates are today and where they will be in a few years.