Variable Rate vs. Fixed Rate Conversation Renewed

With the most recent interest rate announcement last week, and the knowledge that interest rates are set to remain low for the foreseeable future, the debate for variable rate mortgage over fixed rate has gained new momentum.

The debate between the value of a fixed-rate mortgage vs variable rate rages on. There are a number of factors to consider, including your comfort with risk. Propertywire.com recently published a piece weighing the options.
from propertywire.com:

With the most recent interest rate announcement last week, and the knowledge that interest rates are set to remain low for the foreseeable future, the debate for variable rate mortgage over fixed rate has gained new momentum.“With short-term rates now likely to stay at very low levels, and long-term rates testing record lows, whether to lock into a longer-term fixed mortgage rate or choose a variable rate continues to be a hot-button issue among home buyers,” says Benjamin Reitzes, Senior Economist, BMO Economics.

According to the Bank of Montreal, history would indicate that a variable rate is the way to go: “Research shows that there is little debate as to which has been the better option for homebuyers. Typically, borrowers save money by staying in variable products, and riding the rollercoaster of fluctuating rates. In fact, since 1975 the cost-effective route for borrowers was to stay variable 83 per cent of the time. And while the spread between 5-year fixed mortgage rates and variable rates has fallen from the all-time high hit in mid-2010, it remains historically elevated.

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