Historically, Canadians have preferred the predictability and security of fixed rate mortgages, but with variable mortgages gaining momentum, rising rates may have greater ramifications.
Variable interest rates have always played a part in the Canadian economy, including on savings accounts, car loans, and home equity lines of credit. Variable interest rate mortgages, however, have historically made up a small proportion of the residential mortgage market. Entering the pandemic, variable rate mortgages accounted for 18% of all outstanding mortgage funds in Canada. That has now almost doubled to 33% today, as Canadians’ appetite for variable rate mortgages has grown of late. So far in 2022, variable rate mortgage funds advanced in Canada have exceeded fixed rate mortgages (53% vs. 47% respectively) for the first time.
With the majority of borrowers to date in 2022 choosing to eschew the security of a fixed rate mortgage for the risks (and rewards) of a variable rate, it means that substantially more Canadians will feel the impacts of rising rates in the short term, instead of just at renewal time. With uncertainty around the magnitude and timing of future increases, how much this impacts those variable rate borrowers remains to be seen.
Twice a year, rennie intelligence produces the rennie landscape, which tracks a variety of demographic and economic indicators that directly and indirectly influence our housing market here in Metro Vancouver. Our goal is to provide our community with a basis for evaluating the trajectory of the factors that collectively define the context of the real estate market.
Our rennie intelligence team comprises our in-house demographer, senior economist, and market analysts. Together, they empower individuals, organizations, and institutions with data-driven market insight and analysis. Experts in urban land economics, community planning, shifting demographics, and real estate trends, their strategic research supports a comprehensive advisory service offering and forms the basis of frequent reports and public presentations. Their thoughtful and objective approach truly embodies the core values of rennie.
