Canadians opting for shorter mortgage terms as they hope for declining interest rates
BNN Bloomberg
With mortgage rates at their highest level in more than a decade, home owners and prospective buyers tend to focus on getting the best rate. While shopping around, however, experts say borrowers shouldn't forget about term length.
Samantha Brookes, founder and CEO of Mortgages of Canada, says that before the Bank of Canada started raising interest rates last year, a five-year term was the norm for most homebuyers, but that's changed. People are now going shorter in hopes that interest rates will come back down in the coming years.
"It makes sense because if the Bank of Canada starts decreasing rates, let's say next year, and you're in a three-year (term), you only have two years left," she says.
"You break your mortgage, you have a two-year penalty, but your interest rates are much lower and your payments are more affordable. So that's why people are going for the shorter term mortgage right now."
