14 August 2018

They could save about $22,000 in interest payments during 15 years of mortgage.

In 2008, Milevsky updated the study: the odds of benefitting from a variable rate exceeded 90%, although the amount saved fell to $20,630.

Ten years later, we can see a different situation. Borrowers have a much wider choice now, so instead of just accepting the first offer from your existing bank, you can consult a mortgage broker or use online rate comparison sites in order to find the best rate possible.

It should be noted that now we’re facing rate hikes. The central bank has raised its key lending rate 4 times since the last summer already, and the variable rates rose by 1%.

It’s impossible to predict how the rates will change later or how the stock market will react. That’s why it’s more reasonable to focus on the information we have today.

Determine your personal financial situation and figure out how a change in interest rates, term, or amortization could affect you. Stress test your own finances to make sure you can withstand a 1%-2% rate increase or a possible temporary job loss.

Now, the best five-year variable rate with great discounts varies from 2.60% to 2.70%. Meanwhile, the best short-term fixed rate is about 3%, that’s why a variable option is more attractive these days.