During the COVID-19 epidemic, they were more favoured as house values rose and interest rates were near zero, making many purchasers’ payments more affordable than if they had chosen a fixed-rate mortgage.
“Should I lock in? That’s the million-dollar question right now, and it’s a tough question to answer,” Dani Hanna, a mortgage broker and owner of the Mortgage Firm in London, Ontario, told CBC News.
“The reason the rates have been increasing so quickly is because of inflation. Inflation is through the roof. We could see that start to subside in the next couple of months, and if that starts to subside, could we see interest rates go down? Possibly,” he said.
Therefore, some mortgage brokers are hesitant to urge their clients to lock in a fixed rate.
If inflation begins to decelerate, the central bank may reduce interest rates again, dragging payments down with it. According to Hanna, if a homeowner switches to a fixed rate, they may end up paying much more than if they retained their variable rate.
