Canadian home buyers are shifting to fixed-rate mortgages at the fastest pace in a year, on bets that more rate hikes from the central bank are in store to bring inflation under control, even as the cost of these home loans remains close to the highest level since 2009.
Borrowers are also increasingly eschewing the popular five-year fixed mortgage term in favor of two- or three-year loans, to guard against the possibility that the Bank of Canada’s rapid rate hikes push the economy into a recession and result in another easing cycle.
More than half of Canadian home buyers opted for variable-rate mortgages since July 2021, as these became cheaper relative to fixed.
Now, that is reversing, returning to the historic norm. Fixed-rate mortgages made up 49% of all home loans…
