It’s a decision that millions of Canadian homeowners struggle with repeatedly during their time as homeowners: Do they choose the security of a fixed-rate mortgage, or opt for the flexibility (and usually lower cost) of a variable rate and hope that rates don’t spike higher?
But right now, conditions in the mortgage market mean homeowners can actually get the best of both worlds, according to market-watchers.
For years, we’ve seen evidence that people who opted for variable-rate mortgages ended up saving money over the fixed-rate crowd – anywhere from 77-90% of the time, depending on the period selected and the assumptions used.
Despite that, 60% of the 5.8 million mortgages out there are fixed-rate mortgages, and the five-year term is especially popular. Another 31% of mortgages are variable- or adjustable-rate. The rest are hybrids that have a bit of both types of mortgages built in.
In the past year, we’ve seen evidence that people have been starting to swing more towards variables. But in the past few months, two things have happened in the Canadian mortgage market that may have the “variable-is-best” crowd changing their minds… or at least re-thinking what used to be an easy decision.
Click here for five reasons why a fixed-rate mortgage could be your best bet from CBC News.