There were times in Canada when interest rates were so high that Canadians had no choice but to take short term rates in hopes of saving a few dollars for as little as 6 month or a year. The one year fixed rate has been as volatile a product as any mortgage product over the last 40 years.

In 1981 when rates sky rocketed and Canada was in the first of many oil based recessions the 1 yr fixed rate was 21.25%, the five year fixed rate was 21.75%, as my brothers explained you took as low a rate as you could to make it through the next 6 month or a year. Granted average house price was substantially lower and a very small percentage of the economy made a 6 figure income.

Fast forward to 1991 and a decade later rates are still quite high with 5 year at 11.5% and the 1 year fixed mortgage at 11.00% even. So in a decade the spread had changed some but not much and of course at these rates every .25% counts as well.

Jump forward again another ten years and we see that in 2001 that the 1 year fixed mortgage rate is 7.40% and that the 5 year is at 7.75%. A pattern seems to form making the spread ever so slight but is it really enough at that point to make someone take a 1 year term over a fixed guaranteed 5 year term?

And again in 2015 this month you will find an anomaly, the 5 yr bench mark is 4.69% and the one year fixed rate is 2.89%. Discounted rates are even lower of course but for comparison the bench mark is the fixed rate qualifier. I think this shows that lenders are starting to take a bigger spread on the fixed rate mortgages than they have in the past. This means for consumers that you need to be aware of trends that happen or be consulting with a mortgage broker to make sure you are getting the right rate or your situation or as we like to think of it as “Real Life Mortgage Solutions”.