19 may 2010

RBC says 40% of potential homebuyers are planning to take a hybrid mortgage. (last year it was only 32%).
It’s a little bit confusing because of CAAMP’s recent mortgage survey. It showed only 6% of Canadians have actually chosen a hybrid mortgage in the last year.
Ipsos Reid’s Sean Simpson says that hybrids are becoming more attractive, because they let people get low rates and still retain an element of security.
Based on RBC information, we may say, hybrids are getting more popular.
“The more consumers learn about the benefits of mortgage combination, the more we see homebuyers with floating rate mortgage options”, – adds Marcia Moffat, head of Home Equity Financing at RBC.
Of course, we can’t see anywhere close to 32-40% of borrowers with hybrids, but the increase in hybrid mortgage inquiries is very notable.
The academic research also approves this kind of mortgage choice. Dr. Moshe Milevsky believes hybrids can be a good variant of mortgage risk management.
As history shows, well-qualified borrowers may save more money with ultra-low variable rates or a 1-year fixed. But it doesn’t work for everyone. Homeowners with moderately strong personal level can’t afford to dismiss the concept of risk management.  
Many of them, actually, will put 100% of their mortgage in a variable rate. Probably, they will never appreciate the real value of risk management…of course, if nothing bad happens.

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