Variable vs Fixed Interest Rates
- Thread starter dzerykdm
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- Aug 31, 2007
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If you can`t sleep at night because you are worried about fixed rates rocketing up then lock in.
If you smile at the thought of how cheap your variable rate mortgages are right now stay in the variable.
It truly is a personal decision regarding your tolerance to risk versus reward.
If you smile at the thought of how cheap your variable rate mortgages are right now stay in the variable.
It truly is a personal decision regarding your tolerance to risk versus reward.
- Joined
- Oct 16, 2007
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- 758
We have been recommending VRM`s to our clients for almost 2 years now. Currently, VRM`s are a very good option, but you should pay really close attention to the level of the fixed rates in about 6 to 12 months from now, and be prepared to consider locking in. We are already seeing some very interesting competion in the 12 month fixed terms, currently priced cheaper than the VRM`s. This means the banks are encouraging clients to be locking in and coming up for renewal in a year`s time.
If you read between the lines, the banks are somewhat `showing their cards`.
If you read between the lines, the banks are somewhat `showing their cards`.
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- Aug 31, 2007
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- 526
What`s very interesting is one of the big five banks has their four year mortgage at a lower rate than two year terms.
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- Aug 30, 2007
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- 412
QUOTE (investmart @ Nov 20 2008, 06:41 AM) I guess this means the banks too expect further interest reduction. I agree with Jason.
Also, I still strongly prefer variable. it doesn`t wake me up at night
(Nov 19) OTTAWA - The Bank of Canada conceded for the first time that the Canadian economy could be headed for a recession, adding that more stimulus and lower interest rates are needed to cushion the steep fall.
Bank governor Mark Carney said in a speech before a London, England business audience that the Canadian economy has deteriorated more quickly than he had anticipated even only a month ago, hinting strongly he will cut interest rates at the next opportunity Dec. 9.
...
http://ca.news.yahoo.com/s/capress/081119/.../carney_economy
Also, I still strongly prefer variable. it doesn`t wake me up at night
(Nov 19) OTTAWA - The Bank of Canada conceded for the first time that the Canadian economy could be headed for a recession, adding that more stimulus and lower interest rates are needed to cushion the steep fall.
Bank governor Mark Carney said in a speech before a London, England business audience that the Canadian economy has deteriorated more quickly than he had anticipated even only a month ago, hinting strongly he will cut interest rates at the next opportunity Dec. 9.
...
http://ca.news.yahoo.com/s/capress/081119/.../carney_economy
I was talking to a RBC mortgage fellow tonight and he mentioned that they`ve lowered their variable rates. Checked their webpage and sure enough, they`re down from prime plus 1 to prime plus 0.6.
Could it be the world is starting to flip back right-side-up again?
Then I went to BMO`s site, they`re still at prime plus 1.25.
Maybe not.
w
Could it be the world is starting to flip back right-side-up again?
Then I went to BMO`s site, they`re still at prime plus 1.25.
Maybe not.
w
Article from Globe and Mail Variable mortgages cheaper after rate cut
LORI MCLEOD
Globe and Mail update
October 22, 2008 at 1:46 PM EDT
Variable mortgages have become a bit cheaper after the Bank of Canada cut its key lending rate by a quarter of a percentage point on Tuesday.
The big winners are people who already hold variable products at a fixed discount to prime, the rate the banks offer their best customers.
Those borrowers are now receiving the full effect of three quarters of a percentage point worth of rate cuts made by Canada`s central bank this month, as the banks fall in step and lower their prime rates to 4 per cent.
New variable mortgages will also benefit from the rate cut, but the chance of receiving a discount from prime evaporated earlier this month.
Most lenders are now charging a full percentage point or more above the prime rate, as they pass on their own increased borrowing costs to the consumer.
Canadian Imperial Bank of Commerce, for example, offers a five-year flex variable product at 5 per cent, and a five-year open variable at 5.5 per cent. Bank of Nova Scotia offers a fixed five-year variable mortgage at 5 per cent, and Bank of Montreal has a three-year variable at 5.25 per cent.
Now the great unknown is whether the banks will raise the premiums they are charging over prime even further; something that largely depends on what happens to their own costs.
“We look at it pretty well daily. We watch our margins daily. The prime rate is a give-back, it`s a benefit to the customer. I don`t see anything immediate, but we do watch the competitive landscape to see what`s going on,” said Joan Dal Bianco, vice-president of real estate secured lending at TD Canada Trust.
The credit crisis and economic uncertainty have been driving up costs for the banks, including the rate at which they borrow money from one another.
Some moderate relief came last week as the federal government bought back $5-billion in mortgages from lenders, Ms. Dal Bianco said. This was the first phase of a plan to buy back a total of $25-billion in mortgages, with $7-billion more set to be purchased on Thursday.
Other big banks shed little light on whether they plan to review the price of their variable products.
“Historically, for proprietary reasons, the banks don`t provide advance notice of rate changes,” Joe Konecny of Bank of Nova Scotia`s public affairs department, said in an e-mail when asked if the bank has any plans to either change or review its variable mortgage rates.
LORI MCLEOD
Globe and Mail update
October 22, 2008 at 1:46 PM EDT
Variable mortgages have become a bit cheaper after the Bank of Canada cut its key lending rate by a quarter of a percentage point on Tuesday.
The big winners are people who already hold variable products at a fixed discount to prime, the rate the banks offer their best customers.
Those borrowers are now receiving the full effect of three quarters of a percentage point worth of rate cuts made by Canada`s central bank this month, as the banks fall in step and lower their prime rates to 4 per cent.
New variable mortgages will also benefit from the rate cut, but the chance of receiving a discount from prime evaporated earlier this month.
Most lenders are now charging a full percentage point or more above the prime rate, as they pass on their own increased borrowing costs to the consumer.
Canadian Imperial Bank of Commerce, for example, offers a five-year flex variable product at 5 per cent, and a five-year open variable at 5.5 per cent. Bank of Nova Scotia offers a fixed five-year variable mortgage at 5 per cent, and Bank of Montreal has a three-year variable at 5.25 per cent.
Now the great unknown is whether the banks will raise the premiums they are charging over prime even further; something that largely depends on what happens to their own costs.
“We look at it pretty well daily. We watch our margins daily. The prime rate is a give-back, it`s a benefit to the customer. I don`t see anything immediate, but we do watch the competitive landscape to see what`s going on,” said Joan Dal Bianco, vice-president of real estate secured lending at TD Canada Trust.
The credit crisis and economic uncertainty have been driving up costs for the banks, including the rate at which they borrow money from one another.
Some moderate relief came last week as the federal government bought back $5-billion in mortgages from lenders, Ms. Dal Bianco said. This was the first phase of a plan to buy back a total of $25-billion in mortgages, with $7-billion more set to be purchased on Thursday.
Other big banks shed little light on whether they plan to review the price of their variable products.
“Historically, for proprietary reasons, the banks don`t provide advance notice of rate changes,” Joe Konecny of Bank of Nova Scotia`s public affairs department, said in an e-mail when asked if the bank has any plans to either change or review its variable mortgage rates.
- Joined
- Sep 3, 2007
- Messages
- 489
At present I am opposed to the variable rate mortgage. Prime plus for a 5 year term doesn`t excite me. Right now the one year rate in my opinion is the best buy. Then you can see where the market is going. Some lenders offer 120 day rate holds so you are really only taking a chance on 8 months of instability. I think the variable rate situation will change and we will see a correction in the calculations for the variable rates. I would hate to lock in at prime plus 1 for 5 years when six months down the line it is prime or prime minus again.