Tim's Mortgage News / Rates and FAQ's

[ExtraSlow]

Doubt I'll pay off my mortgage before may '25 when mine is up for renewal. But always hope!

[killramos]

lol going variable is “timing the market”

That might be the funniest thing I have heard all year.

[ercchry]

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lol going variable is “timing the market”

That might be the funniest thing I have heard all year.

What else would you call paying over 1% more in interest?

Historically variable beats, but historically the delta is way tighter as well. If you’re just going to accept market conditions, go 5yr fixed, you would need yet another unprecedented event for rates to fall enough to make up the current difference in rate at renewal. If you’re going variable for the ability to terminate a term early to TIME the market… you might as well just use a shorter term for better results.

[killramos]

Taking variable is accepting market conditions.

Fixed is making a choice that you want to freeze market conditions today rather than expose yourself to the market going forward.

Face value of variable is higher today than a fixed rate becuase the forward curve is backwardated and a fixed contract peanut butters the whole contract in to one easy to understand number. This is a well established and liquid market.

None of this is rocket appliances.

[riander5]

Iv been getting bent over on Variable due to purchasing a house in 2022. I don't consider myself a smart man but not locking in at 5.5% plus seemed like a no-brainer.

[ercchry]

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Taking variable is accepting market conditions.

Fixed is making a choice that you want to freeze market conditions today rather than expose yourself to the market going forward.

Face value of variable is higher today than a fixed rate becuase the forward curve is backwardated and a fixed contract peanut butters the whole contract in to one easy to understand number. This is a well established and liquid market.

None of this is rocket appliances.

Thanks Investopedia.

In the real world people use either term type as future speculation… cause everyone feels better when they think they’re beating the market. Arguing the merits is futile when humans get feels. Life isn’t a vacuum.

Either term type has its own specific terms, and the mechanism used in a variable for “timing the market” is the low penalty to break the term.

Given that about 60% of all loans break early, this is the real world comparison. The argument at hand is simple. If you want to play that game, just take the current savings of a shorter than 5yr fixed term, not a variable. Why? Cause the delta is too large. It would take a massive, unforeseen event to come out ahead in the short to mid term. The argument was never against variable being the (subsidized) market value of capital at any given time, it’s that it’s currently being used as a tool to break terms early as we’re currently in a downward trend and 8/10 people picking a VRM today are trying to time the bottom.

[killramos]

That’s a whole lot of words of made up nonsense pulled out of your ass dancing around the fact that you don’t seem to understand how a fixed rate loan is priced compared to a variable rate one that is “OVER 1% MORE INTEREST” when it’s fucking not.

I’d maybe spend a bit more time actually reading investopedia than knocking it if I was you.

Picking the bottom. Continued comedy.

[ercchry]

Yeah, door 3… not riding a term to maturity. You really are struggling with separating the mechanics of the loan from the pricing of it.

I am not endorsing people timing the bottom, but people do that. All the time, constantly actually. Almost as if mortgages are granted to people without a CFA or something.

Right now, if that’s what someone is trying to do, when they are TODAY choosing to pay a large premium over the available fixed rates. I am simply suggesting against it.

[dirtsniffer]

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Full Feature Rates up to 120 day rate protection
Starting at:

2 Year Fixed - 6.14% * High Ratio
3 Year Fixed - 5.44% * High Ratio
4 Year Fixed - 5.24% * High Ratio

5 Year Fixed - 5.14% to 5.39% * High Ratio
5 Year Fixed - 5.44% to 5.84% * Conventional

5 Year ARM/VRM - 6.15% - 6.90%

This is what I was looking at in January. Ended up with a variable at P-1%, which was about 1% higher. Only 6 months later the rate difference is under .25% and likely will be lower for me by the end of the year. Not sure how that compares to today's rates. Edit. Looks like variable rates are around the same and Fixed is a bit lower. I'm not smart enough to say Fixed would save me money over the next 5 years.

[Disoblige]

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This is what I was looking at in January. Ended up with a variable at P-1%, which was about 1% higher. Only 6 months later the rate difference is under .25% and likely will be lower for me by the end of the year. Not sure how that compares to today's rates. Edit. Looks like variable rates are around the same and Fixed is a bit lower. I'm not smart enough to say Fixed would save me money over the next 5 years.

Same boat as you essentially. I like my chances with variable in this situation.