Tuesday, March 24, 2009

Interest rates, what's best Fixed vs. variable... a different story

Historically speaking, variable rate mortgages have always been better choices then fixed rates as far as interest savings. see the graph here: http://www.mississauga4sale.com/rates_1year_5year.jpg

However, that was then, this is now. With the discounted variable rates being a thing of the past (it may be something that we will not see for many years to come) and variable rate mortgages now being offered at a premium, the gap between variable and fixed rates is now much smaller.

So am I saying that you should go fixed? Not necessarily. You will experience an immediate savings with the variable rate, as always in the past, and most variable rate products allow you to switch to a fixed at anytime without penalty. Going the variable rate route at this day and age, is much more risky than it has been in the past. A

nyone going with a variable rate must be prepared to switch at some point within the next year to two years when rates start going back up again in order to benefit from any savings. For this reason, I suggest this product only for the more financial savvy mortgage seekers. For homeowners who would rather get into a mortgage and not have to worry about it for the next 5 years, the fixed rate will be the better, safer option.

We anticipate one more rate drop of 25 basis points (1/4%) during the next interest rate announcement from the Bank of Canada on April 21rd which will most likely be the last prime rate drop we see. Can it really go much lower? Bank of Canada Prime rate is currently sitting at .5%

Fixed rates are continuing to drop with a 5 year fixed now as low as 4.07%! WOW!

Today's lowest rates are as follows:

1 year fixed 3.25%
2 year fixed 3.89%
3 year fixed 3.99
4 year fixed 4.15%
5 year fixed 4.15%
5 year fixed 4.07% (30 day quick close)
5 year variable 3.30% (prime + 0.8%)


I hope this finds you Happy and Healthy!

All the Best!


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS Newsletter
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
2 FAX 905-828-2829 ÈCELL
: mark@mississauga4sale.com
Website : Mississauga4Sale.com

No comments:

Post a Comment