The majority of Canadians (74%) would opt for a medium-term or longer-term mortgage if they were to acquire, refinance or renew a mortgage today, according to a CIBC poll. That includes 27% who think now is the time to look beyond the traditional 5-year fixed mortgage for a term of up to 10 years.
Other highlights of the poll:
- 47% would choose a medium-term mortgage (three or five years) if they were to acquire, refinance or renew a mortgage today
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- 19% would go with a shorter term (one or two years)
- 62% of Canadians with a mortgage believe it will be at least 10 years before they are mortgage-free, making it possible to choose a longer term such as a 10-year fixed rate
“Canadians are recognizing that today’s historically low rates won’t last forever and some are looking for ways to bring predictability to their finances over the long term,” says Barry Gollom, vice president, Mortgages and Lending at CIBC. “Most Canadians tend to opt for a fixed rate over 5 years when choosing a mortgage today. With more than 1 in 4 Canadians now saying they would choose a longer term of 7 or 10 years, we may be seeing the start of a shift to longer terms.”
Benefits of a longer-term mortgage
While a longer-term mortgage may not be right for everyone, Gollom says locking in to a medium- or longer-term fixed-rate mortgage can reduce the stress that can come with following interest rates.
Read: Costly homes make it hard for U.S. buyers to enter market
“If interest rates rise in the next year or two, homeowners with shorter-term mortgages or variable-rate mortgages could see their payments move higher,” Gollom says. “Having a medium or longer-term fixed rate can act as a measure of stability and protection — especially for those who have recently bought their first home.”
This shift to longer-term, fixed-rate mortgages signals growing interest among Canadians to gain greater control and certainty over their largest financial obligation. With a consistent and predictable mortgage payment at today’s low rates guaranteed for many years, they may have the opportunity to pay down their mortgage faster and minimize interest costs, which will help to keep them on track for their broader financial goals.