The smart money when it comes to the type of interest rate you want on your mortgage has typically always been a variable rate, right? This is the line of thinking that many Canadians have grown up with, because it’s the type of rate that’s likely going to save them the most money. But enter the Bank of Canada with their hugely low rates, and continuous warnings that those rates wouldn’t last forever, and it has the majority of Canadians changing their tune. Now they want a fixed rate; so when the interest rate does start to climb, theirs doesn’t. This, according to a recent study created by the Bank of Montreal.
The study was conducted by Leger Marketing and the results were published yesterday. Those results show that 65% of Canadians are now looking to lock in the rate for their Toronto mortgage, and that 50% of respondents said that they would happily consider a shorter amortization period in order to pay off their mortgage faster. That’s great news for BMO, as they’ve just released their discounted mortgages that come with shorter amortization periods for the second time in three months.
The survey also shed some light on who is willing to lock in and get a shorter amortization period. Those that are married or who have children seem to be the most eager to take on cheaper mortgages with shorter lives, as it’s more important to them that they get out of debt as quickly as possible. 57% of those who were married said that they would take on a shorter amortization; while 63% of participants with children said that they would do the same. The survey did not touch on things like home equity loans or home equity lines of credit in Canada, in order to see if the data only applied to first mortgages, or second mortgages as well.
The results might encourage those in Ottawa, as they see that Canadians are heeding their warnings about taking on too much debt and seem to be trying to come up with ways to avoid doing just that. And both the fixed rate issue and the shorter amortization periods give all Canadians looking for a mortgage something to think about. After all, that variable rate that has been “the smart way to go,” might no longer be; and many homebuyers and homeowners are still getting used to the government-imposed shorter amortization periods, yet are still ready to take on those that are even shorter.
Are you looking for a mortgage in today’s low-interest climate? Would you rather lock into a rate for the next 5 or 10 years, or do you think variable is still the way to go?
