The financial incentive to recommend longer-term variable mortgages, which pay a higher commission, is substantial, says Toronto-based broker
A recent upswing in fixed-rate mortgages may tempt some mortgage professionals to nudge clients toward variable rates, despite high uncertainty about where rates are headed next, an influential Toronto-based mortgage broker warns.
Borrowers’ appetite for variable-rate mortgages virtually vanished following a spate of interest rate increases by the. Variable-rate loans made up only 7.4 per cent of new mortgages in May, according to a survey by Mortgage Professionals Canada, the national mortgage-broker industry association. That compares to a peak of 57 per cent in January, 2022, just before the central bank started its series of rate hikes in March of that year.
The website of Calgary-based True North Mortgage showed Ontario users a two-year fixed at 6.54 per cent; a three-year fixed at 6.19 per cent; and a five-year variable at 5.99 per cent. Similarly, the Bank of Montreal’swebsite was showing a two-year fixed at 7.69 per cent; a three-year fixed at 7.25 per cent; and a five-year variable at 7.2 per cent.
In fact, there’s no consensus that the rate hikes are over. The Bank of Canada has two more chances to increase its benchmark rate before the end of the year. Whether it will do so depends on what economic data – and especially inflation readings – show, several economists have warned.
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