Of course, there’s also the fact that any interest rate changes in 2022 are likely to be modest hikes, with the Bank fearing it will introduce increases so drastic or sudden they could derail the Canadian economy.
“I think anytime you have modest increases on something that’s too aggressive or overwhelming, it’s a lot easier for consumers to adjust to it,” Lee said. “If they raise rates too aggressively, it can lead to default for many consumers – not just mortgages.”
With that in mind, whether clients will turn more to fixed or variable rate options is one that is expected to remain important throughout 2022. Lee said that while both have their advantages, the choice depends. ultimately the client’s personal preference and risk appetite.
“Fixed rate mortgages are still at all time lows and give you some kind of peace of mind for years to come knowing that your payments are fixed and you can sleep through the night without having to worry about anything. either, “he said.
“With variable rates, there is a very convincing case, because there is a huge discount between the fixed and the variable. Historically, variable rates have outperformed fixed rates probably more than 70% of the time. [However,] what I tell my clients is that it is a personal decision. It is important to understand the person’s individual situation.