In the past few years interest rates have been some of lowest we’ve ever seen. Ontario mortgage news outlets have continuously speculated about when they are going to go up. Whether or not interest rates go up and down depends on so many factors including not only the economy at home but also the economy in the US and abroad.
Ontario mortgage news outlets are now reporting on a shift in the types of mortgages consumers are choosing which seems to indicate that Canadians are thinking that interest rates are on their way up.
CIBC released a Poll conducted by Harris/Decima that revealed that half of Canadians said they would choose a fixed rate mortgage if they had to decide today, which was a substantial increase over last year. The poll also found that Canadians expect that mortgage interest rates will go up over the next 12 months and that Canadians are seeking to lock-in at today’s low fixed rate mortgage rates.
Here are some of the statistics that were revealed in the poll:
- 50 percent of Canadians said they would choose a fixed rate mortgage today, compared to only 39 percent last year
- 32 percent of Canadians said they would choose a variable rate mortgage today, the same percentage as last year
- Another 18 percent said they were uncertain which mortgage would be right for them, considerably lower than the 30 percent who were undecided in 2011
- 86 percent of Canadians believe mortgage rates will either stay the same or be higher 12 months from now
- Only 6 percent of Canadians believe mortgage rates will be lower 12 months from now
Variable rate mortgages carry more risk than fixed rate mortgages because if mortgage interest rates increase so does the interest on a variable rate mortgage. This can result in an increase to a consumer’s mortgage payment or in the interest portion of the mortgage payments that are applied to principal. Fixed rate mortgages are fixed for a pre-determined period of time so if you lock-in to a fixed rate mortgage for 5 years for example, your mortgage rate will not change during the 5 year term.
This is why so many Canadians are turning towards fixed rate mortgages. Let’s face it, interest rates are not going to stay at the historic lows that they have been forever. While some banks may still have rate wars from time to time, interest rates are bound to go up eventually.
Those who want to take advantage of variable rate mortgages and mitigate their risk can opt for a variable rate mortgage that offers the option to lock-in. This way if interest rates start to rise you can lock-in at any time.
With that said, with mortgages at some banks as low as 3% interest, you can’t really go wrong by locking in at these types of rates over a 4-5 year term. The best thing you can do if you are in the market for a new mortgage is to pay attention to Ontario mortgage news so that when the time is right you will be ready to make your move.