3 August 2010

The fixed rates are quite a good variant for those who can’t afford risk of payment hikes.
Nevertheless, almost every week we read mortgage professionals’ reports saying that variables are better in 88-90% of cases. But with today’s discount, 77% will be more true to life.
The problem is that people often forget about 10-23% of cases when the fixed rates win. That’s why it’s necessary to pay attention at this fact, especially now, when the prime rate is going up.
As the history shows, fixed rates often win, even in cases when the variable rates were lower at the beginning. This scheme seems to work most often when prime rate starts increasing. And today we can see it happening.
In other words, variables still have many benefits, but there are some items you should think about before choosing it.
•    If  your budget is strictly limited
•    If you worry about the prime rate exceeding all the analysts’ expectations and forecasts in the future 18-24 months
•    If you can find a good deal on a 5-year fixed
…then you cannot be blamed if you choose a fixed rate.
Yes, your friends may tell you all about variable rates probabilities, but as you know: “Probability is expectation founded upon partial knowledge”. So it’s always necessary to consult your mortgage broker in order to understand what’s better in your peculiar situation.