Posted by: Daryl & Wendy Ashby | December 24, 2009

Variable rate mortgages

Variable rate mortgages now may be the way to go.  

Consider the spread between current closed five year variable rate mortgages at 2.25% (average rate) and a five year fixed closed rate at 4.25% (average rate).  

The rate advantage over time with the variable may make it worthwhile to consider going back to the variable rate mortgage program.  Its not a decision that should be made without full explanation of the pros and cons of going this way for purchasers.  

The past two rate cycle hikes (Bank of Canada)  had Bank Prime rate increases of approx. 2.0% – 2.25% over a +two year period, if that cycle repeats again, this may mean variable rate mortgages a couple of years down the road may be in the low to mid 4.0% range, compare the savings generated by going variable today over going fixed today.

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