While borrowers usually choose a five-year option on the fixed rate, current preferences are geared towards one-, two-, or three-year arrangements, Bourassa-Ochoa said. “This is really telling us that there’s an expectation that interest rates will be decreasing down the road and that they don’t want to be locked in a mortgage for five years at a higher rate.”

Five-year fixed-rate mortgages now account for less than 15% of new mortgages, according to the report, with variable-rate mortgages – which surged in popularity during the low-rate environment of the COVID-19 pandemic – plummeting to less than 20% of new mortgages by the beginning of this year.

How popular are alternative lending options among Canadian mortgage holders?

Non-banking lending saw something of a surge in 2022, with mortgage activity in that space accelerating until Q3 and matching the pace of the banking sector’s mortgage growth, CMHC said.

The fact that it’s increasingly difficult to qualify for a mortgage with conventional lenders means many Canadians are continuing to turn toward the alternative space for their financing needs.

“Lenders are also adjusting in their own way to these higher interest rates, so we are seeing that they are being a little bit more adverse in their lending, a little bit more conservative,” Bourassa-Ochoa said. “So couple that with higher interest rates, with mortgage regulations that have been in place… at the end of the day, it’s making it harder for borrowers to meet the new lender criteria.”