Short-term, fixed-rate mortgages are growing in popularity. Are they right for you?

Is the five-year fixed-rate mortgage still the gold standard in Canada? Shorter terms are growing in popularity, but here's what you should know before locking in.

Shorter-term fixed-rate mortgages are increasingly popular among Canadian homeowners and house hunters seeking the certainty of a steady rate but looking for more flexibility in their financing, experts say.

With the Bank of Canada seemingly getting close to the peak of its interest rate tightening cycle, mortgage professionals who spoke to Global News said the urge to time the market and try to lock in a lower rate on the way down can be a tempting but risky endeavour.

Canada Mortgage and Housing Corp. (CMHC) said in its fall residential real estate report this past week that the proportion of fixed-rate mortgage holders opting for terms shorter than the standard five years has been growing through 2022.

In January, roughly 73 per cent of all fixed-rate mortgages initiated or refinanced in Canada went with terms of four or five years, while only 11 per cent had terms shorter than that.

Since then, the popularity of shorter-term fixed-rate mortgages has grown steadily, it said.

The latest CMHC data available for July shows 28 per cent of fixed mortgages had terms of one to three years, while 45 per cent opted for four to five years.

Shubha Dasgupta, CEO of Toronto-based mortgage brokerage Pineapple, says clients have been inquiring more often about the possibility of a shorter-term mortgage product.

With many economists forecasting the peak of interest rates could be near, Dasgupta says some homeowners are hoping to catch an eventual drop in borrowing costs.