Equifax found Canadian borrowers paid an average of $1,460 a month as of the third quarter in 2022, an almost six per cent jump from the same time in 2022.
“But recently, up until the last six months, there’s been a major shift away from choosing five-year fixed rate money in favour of shorter-term money,” says Molder. “I had never, in my 15-year career, sold a three-year fixed rate mortgage — the five-year variable or five-year fixed has been by and large the most popular.”
The idea, according to Molder, is borrowers who are locked in for five years today will have fear of missing out when everybody else is locked in at a lower rate. “If we expect interest rates to be lower, then that means you get to take advantage of a lower interest rate two years sooner than if you were locked into a five-year rate,” he says. “And we know there’s a good likelihood that interest rates will be lower in the medium term, or 12 to 18 months from now.