A series of Bank of Canada cuts to its overnight rate in the spring has led to falling mortgage rates, with the variable rate lower than fixed.
However, more Canadians have since chosen fixed-rates rather than variable.
“In times of global upheaval and economic uncertainty, it’s natural for people to rethink their finances,” says Justin Thouin, co-founder and CEO of LowestRates.ca. “It’s clear that the uncertainty COVID-19 has created led Canadians to gravitate toward the certainty that fixed-rate mortgages provide.”
Data collected by LowestRates.ca online show that 62.88 percent of visitors to the site chose fixed-rate mortgages during the first three months of the COVID-19 lockdown in Canada, compared to 37.12 percent who opted for variable-rate mortgages.
“The number of Canadians choosing fixed-rate mortgages is up from last year, when 57.73 percent chose fixed during the period of March through May in 2019 and 42.26 percent chose variable-rate mortgages.”
The LowestRates.ca data also shows a large drop in the number of new home purchase quotes on the site, which coincides with real estate data showing record sales declines for new homes across Canada, says Thouin.
“Quotes for new mortgages on LowestRates.ca were down 13.2 percent during the three-month period of March to May, when compared to the same three months the year before,” he says. “It’s not surprising that fewer people were in the market for a new mortgage, since so few homes were sold during those months.”
Mortgage renewals, however, saw an increase.
“There was a big uptick in renewals on LowestRates.ca, with our data showing that mortgage renewals were up 10.22 percent year-over-year during these three months. This surge was the result of Canadians going online to compare rates following the three Bank of Canada rate cuts in March,” says Thouin. “The emergency cuts created a lot of awareness about falling mortgage rates and good deals to be had and we benefited from this trend as search interest for mortgages on our site exploded.”
See the full report at https://www.lowestrates.ca
Copyright Postmedia Network Inc., 2020
