As rates rise, is now the time to lock in a fixed mortgage? Here’s what to know

Variable-rate mortgage holders seeing interest rates rise are getting antsy and thinking more and more about converting, brokers say. If you're in that boat, here's what to know.

The Bank of Canada’s rising interest rates have some variable-rate mortgage holders thinking about the upside of locking in a fixed rate, according to experts who spoke to Global News.

But the peace of mind that comes with a steady rate has trade-offs that homeowners should be aware of before they opt to convert, they warn.

Victor Tran, mortgage and real estate expert at rate.ca, says he’s seen an “uptick” in clients inquiring about locking in fixed-rate mortgages since the Bank of Canada raised its policy rate to 3.25 per cent on Sept. 7, an increase of 75 basis points.

“I think this most recent hike has definitely got more Canadians concerned about their finances,” he says.

Variable-rate mortgages with adjustable payments see monthly mortgage costs rise in step with the central bank’s rate hikes, while homeowners with fixed mortgages only feel the pain of higher interest rates when they renew at the end of their terms.

With the Bank of Canada’s policy rate rising 300 basis points since the start of 2022, adjustable-rate mortgage holders have faced ballooning monthly payments.

Leah Zlatkin, mortgage broker and lowestrates.ca expert, says she’s also heard from more clients in the past week who are worried that their variable rate mortgages might soon become unmanageable as the Bank of Canada has signalled further rate hikes to come.

“We’ve now seen several rate hikes in a row and it’s unrelenting a little bit right now,” she tells Global News. “So many clients are wondering where is the point where I pull the trigger and I move from my variable rate over to a fixed rate?”