Following this months interest rate hike from the Bank of Canada, some mortgage brokers say variable rate products are still popular despite the risk of further increases.
increased its key policy rate on Dec. 7 by 50 basis points to 4.25 per cent. The central bank’s final rate hike of 2022 could mark the “zenith” of its tightening cycle, according to a note to investors from Avery Shenfeld, the chief economist at the Canadian Imperial Bank of Commerce.
Amid higher interest rates, some individuals are still opting to take on a variable rate mortgage, Zlatkin said. However, there is uncertainty surrounding what course of action the central bank will take in 2023. As such, Laird said variable-rate products should be only for individuals with “wiggle room” in their finances.
“We’re still seeing a lot of new mortgage clients still taking the variable today, even after the last Bank of Canada increase earlier this month,” Wilkins said. “Alternatively, a lot of clients are just doing the stick your head in the sand approach where they're signing on for [a] one- or two-year fixed [mortgage] to ride out this storm,” she said
“And five years ago, everyone would have had to pass a stress test at around five per cent,” Laird said adding that many Canadian households are earning more income than when they initially would have purchased their home.
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