Let's talk fixed rates.

• Stable, predictable payments for the entire term.
• With many lenders, the ability to port and increase via blended rate, or refinance with a blended rate to avoid breaking the mortgage and triggering a penalty.

Statistically, most people don't make it through a 5-year term. Common reasons:

• They move.
• They refinance to access equity for debt consolidation or a project.
• They buy another property.

That matters because the cost of breaking a fixed mortgage early (the IRD penalty) can be substantial. The right term length isn't always 5 years.

Variable rates are tied to the Bank of Canada's overnight rate. Fixed rates are a different animal. They're driven mostly by Government of Canada bond yields.

• Bonds are typically safer than stocks. When the economy looks shaky and stocks lose appeal, demand for bonds rises and yields drop.
• When the stock market is booming, investors chase higher equity returns. Demand for bonds falls, prices fall, and yields rise.
• Lenders price 5-year fixed mortgages off the 5-year bond yield (plus a spread for risk and profit).

Translation: when you see headlines about bond yields moving, fixed mortgage rates usually follow within days or weeks.

A shorter amortization (e.g. 25 years vs 30) means higher payments, but significantly less interest over the life of the mortgage. A longer amortization gives flexibility.

• With some lenders, pricing is better at 25 years or less.
• Longer amortization is a safety net if your income changes unexpectedly.
• You can voluntarily pay more (within your prepayment privileges) to act like a shorter amortization, while keeping the lower required payment if you ever need it.
• Initial longer amortization gives flexibility for future purchases (rentals, cottages, a home for your kids), because some lenders will let you reset the payment to contract.

Situations where a longer amortization may be worth considering:

• Fluctuating or commission-based income.
• Upcoming child-care expenses.
• Plans to buy rental property in the next few years.
• Anyone needing a longer amortization to qualify under the stress test.
• Future second home, or helping a child purchase.