Should You Consider a 10-Year Mortgage Rate?


With interest rates at record lows, it might be tempting to consider a 10-year fixed rate. After all, at the current rate of 5.35%, that number is significantly lower than the past decade’s average five-year fixed mortgage rate of 6.78% (albeit, the posted rate).

The tricky thing about 10-year rates is that it’s impossible to predict where interest rates will go within a decade. In the past decade alone, five-year fixed rates fluctuated between 8.75% and 3.49% – and variable rates were even lower. True, if you were to opt for a five-year fixed rate, rates may be substantially above 5.35% when it comes time to renew – or they may not.

A better option is to take a shorter-term fixed mortgage or variable (depending on your level of risk tolerance) and pay the 10-year rate on it. This way you’re paying down much more principal, thus shrinking your overall mortgage balance upon renewal. With a smaller mortgage you’ll be able to tolerate a slightly higher interest rate, and you’ll be leaving yourself open to the possibility that, in five years time, rates will still be below the current 10-year fixed rate.

That being said, every situation is different and a 10-year rate might just make sense for you. To be sure, please contact one of our Licensed Mortgage Brokers to chat about the specifics of your situation.

OWN. GROW. PROTECT. First Foundation is the one-stop-shop for financially responsible Canadians looking to get great advice and save money. Whether arranging financing for a property you OWN, or looking…

Learn more about First Foundation