Variable Rate or Fixed Mortgages

[variance]

If needed to get a mortgage today, would you rather choose a Variable rate mortgage or a fixed rate?

Lets assume rough numbers of 5.5 for variable, or 5.99 for fixed.

BoC has another rate announcement scheduled for Jan 22, do you think the rates will drop again? It does not seem as if mortgage rates have come down relative to the BoC drop last month.

[coldrsx]

fixed if you are risk averse and variable if you are not

[Ven]

Fixed if you have a brain. Variable if you don't.






Oooh I'm gonna get slaughtered for that one

[Weapon_R]

I always opt for fixed rates whenever reasonable. I prefer the consistency and predictability of having my rates stay static for a long period of time [5 years or so]. I am a believer that rates will probably not go down anymore in the next few years, so locking in might be a good idea.

[noCARbob]

boc has said prime will probably drop a full percent. so far its dropped .5 go variable and then lock in to fixed once rates drop

[Maddog55]

most investors will agree that variable will save you the most money. The banks "bank" on you choosing the "peace of mind" of having a fixed rate...which makes them more money. Variable will in the long run give you a better value.

This article shows the difference between the two and how variable has come out on top most of the time. Check out the graph, that explains it quite clearly. I've had a variable ever since I bought my first house in 2001. At the time my rate was 3.25%...over the past 7 yrs I'm still ahead by a long shot with keeping it variable.

[leec001]

Originally posted by noCARbob
boc has said prime will probably drop a full percent. so far its dropped .5 go variable and then lock in to fixed once rates drop

Smart => Variable
Stupid => Fixed

http://www.rbc.com/economics/market/digest.html#fmm

http://www.td.com/economics/qef/qefdec07_pr.pdf

Rate is going to drop at least 0.75% in the next 3 meetings (months).

[pinoyhero]

I think a drop is coming as Can will follow the states who should be dropping this quarter. After that though unless you can stomach a big move or two somewhere in the future, fix it and forget it.

[JordanLotoski]

Originally posted by Ven
Fixed if you have a brain. Variable if you don't.






Oooh I'm gonna get slaughtered for that one

Stats show that over a 25 year mortgage there is more savings in a variable mortgage.

[Aleks]

I keep hearing HELOC is a way better thing to do then a mortgage?

[Maddog55]

Originally posted by Aleks
I keep hearing HELOC is a way better thing to do than a mortgage?

A home equity line of credit is for when you already HAVE a house and mortgage, and you're looking to refinance for more money. I believe the OP is in regards to getting a first mortgage.

[B20EF]

Open Variable was my best choice, go for 40 year amortization and just keep making extra payments towards the principle

[blownz]

Another vote for going variable for the time being and lock it in later this year. It is very likely rates will drop during the year so you will be better off with variable in the short term.

I was lucky (timed it right) and had a variable rate for almost 2 years and then locked in for 5 years at 4.4% 3 years ago. The 4.4% fixed rate has saved me huge as rates have pretty much only gone up the past 3 years. I also like some peace of mind knowing what my payments are going to be.