Shorter fixed-rate mortgages most popular as borrowers feel pinch of higher rates

By January this year, variable-rate mortgages had already fallen to 16.7 per cent, while fixed-rate mortgages with terms of more than one year but less than five years made up a 64 per cent of new and renewed mortgages, showing a continued upward trend.

has climbed from 0.25 per cent at the beginning of 2022 to five per cent this week as the central bank seeks to quell high inflation.Article content There are two kinds of variable-rate mortgages, each with their benefits and drawbacks. More popular are fixed-payment deals, where the interest rate fluctuates but the monthly payment doesn’t, said Cooper. As rates rise, a higher and higher share of the monthly payment goes toward interest instead of the capital cost of the home, and as a result the amortization period — the length of time it would take to pay off the mortgage at the current rate — gets stretched.

“Initially, some people did make lump sum payments to reduce the negative amortization,” she noted, which can help reduce the shock on variable-rate mortgages.credit card debt is where cracks

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