The fixed/variable debate goes on...

A recent article in the Financial Post has stirred up the fixed vs. variable rate once again – hinting that the variable rate's reign may soon be coming to an end. Historically, variable rate mortgages have saved homeowners money, averaging a lower rate than the typical five-year fixed-rate mortgage. With the Bank of Canada's widely-known decision to raise the Prime rate over the next few years, and the bond market bringing fixed rates back to record lows, the tides may be turning. When it comes to deciding which product is right for you, it's best to ignore historic trends and focus on your particular situation. If you're on a tight budget with no room to move, a variable rate isn't right for you because it has the potential to increase up to ten times per year. If you find the qualifying rate uncomfortable – the current posted five-year fixed rate – then again, it's likely not right for you. If you've determined that you can handle the fluctuations of a variable rate, it might be in your best interest to choose that route but pay it at the current posted five-year fixed rate. The extra payments will allow you to drastically cut into your principle, and your budget won't be affected for quite some time – at least until variable rates hit the 5% mark. Another option is the hybrid mortgage – which allows you to split your mortgage into a variable and fixed component, thus taking advantage of the best of both worlds. To truly determine the option that's best for you, however, why not give me a call? There's no obligation to sign on the dotted line, and I'd be happy to uncover the best mortgage for your needs.