Remember the COVID days when everyone hunkered down? We were working from home and we started to invest heavily in renovations, new houses – often in different cities – and gardening.
All that work triggered borrowing. $250 billion worth of mortgages were written in the second half of 2020 and the first half of 2021. Most were five-year fixed rate deals and now they are starting to come up for renewal and we’re entering a busy period for lenders.
National Bank of Canada has taken a deep dive into this situation by examining how homeowners are handling renewal. It turns out we have once again developed an appetite for fixed rate loans.
They were popular during COVID – it was a bit of certainty in an uncertain environment. Then, after COVID, as rates began to fall, borrowers opted for variable rate mortgages. But now, as the big wave of renewals arrives, there is a palpable shift back to fixed rate.
But it is not wholehearted. Many are opting for three or four year fixed-rate deals rather than five but the trend appears to be shifting towards the longer terms.
