[Source - CEP News]
Ottawa - Canadians are increasingly opting for variable rate mortgages when it comes time to buy or refinance a home, according to survey results released by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
The market share of variable and adjustable rate mortgages has almost doubled, to 40% this fall from 21% of those who negotiated their mortgages a year or more ago, CAAMP reports. The association says the switch likely indicates that consumers believe interest rates are more likely to fall than to rise.
There was evidence of a declining mortgage rate trend beginning on Wednesday afternoon as at least two major Canadian financial institutions announced rate reductions.
The lower rates are welcome news, said CAAMP CEO Jim Murphy, although he said the cost of borrowing is only one of three key factors affecting the housing market. Affordability and job security are equally important, he said. "You can't pay a mortgage if you don't have a job.
"Variable rate mortgages are more popular among middle aged and older buyers than among Canadians aged 18-34, the CAAMP study showed. Only 19% of buyers 34 and under opted for variable rate loans compared with 30% of buyers aged 35-54 and 27% of those aged 55 and older.
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