The proportion of Canadians who have applied for fixed-rate mortgages in January has noticeably increased compared to the preceding months, according to new data from online rate comparison platform LowestRates.ca.
Among LowestRates.ca users who were applying for mortgages, 64.4% in January and 54.6% in February went for fixed-rate offerings over variable-rate products. These represented increases of 20% points and 10% points, respectively.
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The upward spikes were observed after the Bank of Canada decided to increase their interest rate to 1.25% on January this year. Historically, most Canadians users of LowestRates.ca selected variable-rate mortgages.
LowestRates.ca cited a prevailing fear of further hikes as a main factor in this trend – a fear that an executive said appears to be misguided, at best.
“The key for Canadians is not to panic. For the past 30 years, mortgage rates have been trending downward,” LowestRates.ca co-founder and CEO Justin Thouin said. “There have been brief periods of increase over that time, like we’re in right now, but a mortgage is a long-term investment and the long-term data tells us that a variable-rate mortgage is the best option.”