A fair amount of mortgage lenders are currently offering low one year term mortgage rates. Generally speaking, when many lenders are really promoting their one year rates, it means that they anticipate a rate change within the next year.
That being said, there is speculation that in a year’s time, fixed interest rates could be 1.0% to 2.0% higher than what they are right now. That means that lenders will be able to renew those borrowers currently holding a one year mortgage (or entering into one shortly) at a higher rate.
A lender of ours, Merix Financial, has provided us with a comparison of what would happen if a borrower locked into a five year rate versus a one year term with renewal at a higher interest rate upon term’s end.