The last few years have been turbulent times for investors. Unlike the U.S. and other countries, the Canadian housing market held steady and has been experiencing strength through 2010.

Record home sales in the first quarter of 2010, are considered to be due to a combination of factors. Pent up demand, low inventory levels and historically low Canada mortgage rates were a potent combination of market drivers. As the housing market becomes more balanced, with many housing inventory becoming available, prices should stabilize and grow at a much slower speed. In Ontario and British Columbia, many homebuyers also rushed to beat the incoming HST tax.

What does the future hold in store for the Canadian housing market? House prices are not expected to appreciate as much as they did in the first half of 2010. Therefore, buyers may find that the more reasonable listing prices, coupled with fewer buyers rushing in to make bids or multiple offers, will mean better value for their real estate dollar. The slight increase in mortgage rates over the second half of the year should not affect the affordability if money was saved buying the houses.

Although it is impossible to exactly predict what will happen with the Canadian economy and interest rates, the general consensus among all the major banks is that variable and fixed interest rates will rise over the next 19 months. The amount the overnight interest rates will rise is a matter of debate. Some banks, like the CIBC, predict that the overnight rate will be 2.5% by the end of 2011. Other banks predict the rates will go even higher. The Royal Bank of Canada and the Toronto Dominion bank predicts the overnight rate will rise to 3.5%. Most other main banks predict somewhere in between, with an average forecast of 3.17%.

Of course, these are only predictions and may change. The speed and strength of the economic recovery, along with global factors, will influence lending rates and monetary policy.

Whenever the time is right for you to purchase, selecting the right lender can save you thousands over the term of your mortgage. Choose a qualified mortgage broker who can shop your mortgage over many lenders to save you money and find the best mortgage rate in Canada.

Talk to any financial planner and almost the first word out of their mouth will be diversification. If not putting all your eggs in one basket makes sense when financial planning, maybe we should think of that when making mortgage decisions. Hybrid mortgages are a great way to diversify your mortgage and get exposure to both fixed and variable rates.

Hybrid or combination mortgages are split 50/50, with half the mortgage being a fixed rate and the other half being variable. Those who select a hybrid mortgage enjoy the safety and security that fixed mortgage rates offer but still get a chance to save on interest should variable rates remain stable or go down. In addition the terms of the mortgage can also be divided and renew at different dates giving even more flexibility.

The Trend Toward Hybrid Mortgages in Canada

According to RBC’s 17th Annual Homeowners Survey, of those who plan on buying a home in the next 2 years 40% want a combination or hybrid mortgage. Currently Hybrids account for less than 10% of the mortgage market with the majority still selecting a fixed mortgage. Though the 40% figure represents what people plan on doing and of course many will not follow through. The figure still shows a growing trend and interest in hybrid mortgages in Canada. This increase in popularity could be due to increased promotion by financial institutions as well as the uncertainty that many people have about the trend in interest rates.

Not all lenders offer combination mortgages but with more people interested you can expect that many of them will be carrying the product in the future. Currently Scotia, RBC, Merix Financial, and HSBC are some of the lenders who offer combinations mortgages in Canada.