28 July 2010

It’s strange that the rates go up, but we have a chance to borrow at prime – 0.7% instead of prime +1% as it was one year ago.
Yes, the variable rate looks attractive at today’s 2.05%, but the five-year fixed-rate mortgage is also falling (4% or even less).
Sal Guatieri, Bank of Montreal senior economist, says: “With the central bank raising rates, it can be a good idea to lock in the fixed mortgage”.
“The central bank is keeping its promise – the rates go up. I suppose, now is a good time to consider locking in for a term,” – says president of Century 21 Canada, Don Lawby.
It seems smart enough, but with 2% variable rate it’s no surprise that people choose to float with Prime.
In the end, if you really can afford to pay more than minimum payment on your variable mortgage and pay off your principal while the rates are so low, you will be better off at the end of the 5 years term – that’s for sure.

Leave a Reply

Your email address will not be published.