Indeed, noted CIBC economist Benjamin Tal says: "We know the five-year (fixed) rate is attractive, but we also know that the prime rate is not rising any time soon.
In the end, most people’s fixed/variable decision boils down to how much they want to pay (or need to pay) a lender for borrowing cost certainty.
Variable rates are roughly prime - 0.70% and a good 4-year fixed (arguably the best fixed term at the moment) is 3.09%. At the outset, that variable rate would save you $37/month per $100,000 of mortgage.
Your financial breathing room will largely determine if this upfront savings is enough to gamble that rates stay low after 18 months or so. If you don’t want to bet all your chips you can always consider a hybrid (i.e., a mortgage split into fixed-rate and variable-rate portions).
Professor Moshe Milevsky, Canada’s best known mortgage researcher, recently told FP: "I still don't get why more Canadians don't split their mortgage."
Milevsky is a noted proponent of hybrid mortgages, for two reasons: 1) people have no clue where rates will go; and, 2) rate diversification offers the same benefits as investment diversification.
If you’re interested in a hybrid, the most competitive nationally-available hybrids in Canada are currently available through Mortgage Intelligence.
In the end, most people’s fixed/variable decision boils down to how much they want to pay (or need to pay) a lender for borrowing cost certainty.
Variable rates are roughly prime - 0.70% and a good 4-year fixed (arguably the best fixed term at the moment) is 3.09%. At the outset, that variable rate would save you $37/month per $100,000 of mortgage.
Professor Moshe Milevsky, Canada’s best known mortgage researcher, recently told FP: "I still don't get why more Canadians don't split their mortgage."
Milevsky is a noted proponent of hybrid mortgages, for two reasons: 1) people have no clue where rates will go; and, 2) rate diversification offers the same benefits as investment diversification.
If you’re interested in a hybrid, the most competitive nationally-available hybrids in Canada are currently available through Mortgage Intelligence.
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