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Stay Variable or Lock In?

I posted last week about the Bank of Canada dropping prime again, and how interest rates are at a historic low.

I got Peter Kinch’s newsletter a day or so later and he talks about the change and if it’s better to stay variable or look at locking in. (FYI, Peggy Wong in Peter’s office is my mortgage broker)

With the Bank of Canada lowering rates by a full half point earlier this week, is this a good time to choose a variable rate mortgage?
Absolutely, even if you have to pay Prime plus .80 today, you’re still below 3.5 %. Clearly these historic lows put us in uncharted territory.

I agree with him, and he mentions the exact issue I discussed with my banker at TD; rates won’t stay this low forever. Even if you lock in to a 5 year fixed now, you’ll still have a great mortgage. I’m waiting until the long term rates come down a little more, and enjoying the super-low variable rates while I can. (Remember, variable rate mortages follow prime, but fixed rate morgages follow the bond market) But I’m watching the market carefully.

Peter also was on CTV Newsnet in Vancouver discussing the rate cut too.

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