Short or Long Term? Variable or Fixed? Which Way Should I Go?

By July 31, 2012Mortgage News

We have dealt with many new and existing clients who have all pondered over these very same questions.In actual fact, there is no right or wrong answer. No one has a “crystal ball” to be 100% accurate with how mortgage rates will behave in the future. To predict with some accuracy future mortgage rates, one would have to take in consideration how our economy is performing as well as the world economy at large. One day we will no doubt see a slow rise in interest rates, whether it is to curb inflation or just to follow other influential countries (ie United States). This does not seem to be on the horizon for now, so most folks tend to choose the lowest rates in a time frame they are comfortable with.

Our best 5 year fixed rate is currently at 3.09% while our best 2 year fixed rate is 2.69%. Our best 10 year fixed rate is 3.99%. For those who like variable, our best rate is currently at Prime minus 0.35% (2.65%). With rates this low, it’s a much easier decision to make. At the end of the day, it all comes down to what your preference is. If you’re looking for peace-of-mind with your mortgage you may wish to choose a fixed term, and if you believe rates could go lower yet and you are not concerned if the rates take a small rate hike from time to time, then you may be a good candidate for going with a variable rate. There is no right or wrong, as we are in a period in time with record low rates. Regardless of the decision made, your rate will always be lower than what the cost of borrowing has been historically, which makes this an ideal time to refinance for renovation purposes or to purchase the home of your dreams.