The debate used to be about whether to go for a variable or fixed rate mortgage. It used to be that the variable rates were significantly lower and one could reduce the interest they paid if they were willing to take on the additional risk of a variable rate mortgage. But these days the rates are about the same and the financial rationale for choosing a variable rate mortgage is quickly disappearing. Click here to see our current mortgage rates: Our best rates
Most variable rate mortgages are almost 3% now. The rate that we offer for a 5 year fixed mortgage rate is currently 3.04% and for a 10 year fixed rate is 3.89%. Any interest rate hikes by the Bank of Canada would likely put the variable rate above the current 5 year fixed rate. So why would anyone choose a variable rate mortgage now and take on the added risk?
Rates are near historic lows and could jump significantly depending on how the world’s debt crisis plays out. Now is probably a good time to consider using a longer term fixed rate mortgage.
Here is an excellent article which discusses why it might even make sense to lock in for 10 years!
DundeeWealth mortgages provided by Invis.