The problem is that (anecdotally, from the few stories I've read) the folks buying these mixer mortgage things are usually young couples and highly leveraged. Truly insane. Imagine when kids come along, divorces, job loss/moves, sickness.
I still haven't been convinced with what is wrong with renting and saving money in a balanced portfolio. There's a huge premium on ownership in Vancouver right now and has been for a while, especially detached and townhouses. Of course there are advantages to ownership but people make it seem like it's their life purpose… scary times.
I guess when shit hits to fan you sell it and hope you managed to get some equity.
As for renting it depends on where you are, what your timing is like and what you want from your home, but the problem I always see with what you are saying is that your rent will always go up so those savings will disappear with time. In a market like we have today your rent might cost more than a mortgage within a few years. Not to mention all the bullshit dealing with landlords, not being able to do anything to your place without getting permission, and inspections. With all the crap I have dealt with lately I think I would rather lose money than rent.