Best 10-Year Mortgage Rates

What is a 10-year fixed rate?

The term “10-year fixed rate” is made up of two parts: the length of time and the type of mortgage.

The length of term is how long you agree to a certain set of conditions for your mortgage, and the type of mortgage dictates the interest rate you’ll pay. A fixed rate mortgage means that the interest rate won’t change throughout the duration of the term (in this case, ten years).

Who is a 10-year fixed term best for?

There are a couple reasons to go for a 10-year fixed term:

1.       You want to lock in an interest rate for as long as possible

2.       You’re extremely worried about rising rates in the next decade

3.       If you break a mortgage after 60 months (5 years) you can only be charged three months’ interest, not the interest rate differential

However, there are a few downsides to this as well:

1.       If rates are going down, you have to wait longer to get a new term

2.       They are the most expensive term option

3.       You have to pay more if you need to break your mortgage early

How popular is a 10-year fixed term?

In Canada, most homebuyers choose a fixed rate mortgage. Mortgage terms between 2 – 4 years are the second most popular option but are far behind 5-year fixed terms. 2 – 4-year terms are the most popular with homebuyers under the age of 55, at 23%. Those with a mortgage over the age of 55 overwhelmingly choose a 5-yearmortgage and are almost evenly split between a 2 – 4-year term and a 6 – 10-year term.

Most people do not go for terms longer than 5 years. In fact, for all the mortgage terms between 6 and 10 years, only 8% of Canadians choose them. Of that 8%, over half choose a 10-year term – about 5% of all Canadians.

With the fear of rising interest rates, many homebuyers and mortgage holders needing to renew will probably opt for a fixed mortgage.