Short-term, fixed-rate mortgages are gaining popularity among Canadian homebuyers, partly due to expectations that interest rates will fall in the coming years, a report from the Canada Mortgage and Housing Corporation suggests.
Homebuyers are increasingly choosing fixed-rate, shorter-term mortgages instead of the standard five-year agreements, according to the report. The trend has been growing since 2023, and has surged since the beginning of this year.
“With borrowers expecting interest rates to fall in the coming years, there is less incentive to lock in for the full five-year term,” reads the report.
In July, fixed-rate mortgages with terms of three to under five years were the most popular choice in Canada, making up more than half of renewed mortgages. By contrast, only 12 percent of renewals were for fixed-rate mortgages with terms of five years or longer….