Homeowners abandon variable-rate mortgages for fixed-rate alternatives as interest rates rise
‘Rush away from variable-rate mortgages deepens for 13th consecutive month’
As interest rates continue their upward trajectory, an increasing number of Canadian homeowners are abandoning variable-rate mortgages in favour of fixed-rate alternatives.
According to data from Statistics Canada, the share of variable mortgages issued by chartered banks fell for the thirteenth straight month in April to a shade under eight per cent. That’s down from 16.7 per cent in January 2023 and well off the recent high of more than 56 per cent in January 2022. In dollar terms, the data shows the total advanced for variable-rate mortgages was less than $2 billion, a stark decline from the $23 billion recorded just one year earlier.
According to James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender, the dwindling popularity of variable mortgages is indicative of a shifting landscape in borrowing preferences.
“During the pandemic, mortgage rates reached historic lows, dropping as low as 0.85 per cent for a five-year variable rate and 1.39 per cent for a five-year fixed rate,” Laird said in an email. “Variable rates became more popular than usual, accounting for over 20 per cent of Ratehub.ca mortgage rate inquiries.”