[info781]

In Canada there is no 30 year fixed product. Most people float month to month. Since interest rates have been dropping since 2002 prices will go up. Australia is very similar.

[DeBraid]

Majority of mortgages in Canada are fixed rate and do not float month to month.

> 73%: Percentage of mortgage holders with fixed-rate mortgages in 2020 Down from 74% in 2019

> 22%: Percentage of mortgages that have variable or adjustable rates Down from 21% in 2019

https://www.canadianmortgagetrends.com/2021/03/the-state-of-...

[don_neufeld]

If you’re American, this statistic can be very deceiving.

America is used to things like 30 year term, 30 year amortization. This is an American fixed product.

I’m Canada, that doesn’t exist.

In Canada, you have things like 5 year term, 25 year amortization. That’s a fixed product (and it’s expensive).

After many years of locking terms, I just use floating rates for financing all my Canadian real estate. Huge savings.

[woofcat]

However that fixed rate is only for normally 5 years. Not like the USA's 30 year fixed rate.

[Waterluvian]

5 year fixed 25 year amortization is the standard safe mortgage people obtain here.

Though I believe a lot more people are using insured high ratio mortgages given how low the rates are.

[mabbo]

As a Canadian homeowner, I don't actually know anyone that floats month to month.

Second: it's more complex than "no 30 year fixed". I have a 30 year mortgage, but I need to 'renew' (renegotiate) it for a new term whenever my term ends- typically 5 years, though I chose a 3-year term last time. The internet rate is fixed throughout the term. At renew, it's totally normal to change banks if they offer a better rate.

[gbear0]

I've found the same thing with most of my friends that own homes. Everyone goes with a fixed mortgage banking on the fear that interest rates would go up. I assumed this was just a lack of financial knowledge on how to calculate and guesstimate projected costs, even with some rate increases over the period.

However, I've since had 2 cases that make the fixed rates more understandable. 1. In order to lower mortgage payments and provide longer stability in monthly payments that I could pass on to tenants, I got a 10yr fixed rate (around 3.4%) amortized over 30 years for an investment property 2+ years ago

2. I recently had to renew my own variable mortgage and I tried to go with variable again, however my mortgage provider wouldn't give me the variable rates advertised on ratehub.ca cause they were only for new customers. It resulted in me having to go with a 5yr fixed rate with another provider cause that was the next lowest that would work for me. I wasn't happy.

[ink_13]

Canadian mortgages are not quite apples-to-apples with US ones. They have similar amortization schedules but the term is only generally 1-5 years (although you can get 7 or 10 year terms at fairly awful rates), after which it can be rolled into another one (at whatever rates are then) or fully paid off without penalty.

[refurb]

Exactly. You need to refinance every few years even with a fixed rate mortgage. That includes new underwriting that has LTV requirements.

Buy with 20% down and housing prices drop 10%? You’ll need to cough up that money.