Apply Now

Fixed Rate Mortgage Vs. Variable Rate Mortgage

December 19, 2011

MonsterMortgage.ca ‘s Principle Broker Vince Gaetano was recently featured in a December 17th, 2011 article in the Financial Post. The Financial Post article discusses the ever-dwindling Variable Discount Rate on Variable rate mortgages. When it comes to mortgages, the fact of the matter is that the decision to go fixed rate or variable rate is in your hands; however, recently banks have made the variable rate less and less appealing.

Typically, the MonsterMortgage.ca team has been very much in favor of the variable rate, and MonsterMortgage.ca clients have benefitted greatly from this mortgage advice. Lenders have now been cutting down the variable discount rate – the ‘variable discount rate’ being the percentage points below the prime rate that you might pay as an interest rate.

Earlier in 2011, one might have been able to secure a variable rate mortgage at Prime – 0.9% (2.1%) or Prime – 0.7% (2.3%). In late 2011, variable rate mortgage offerings are much closer to Prime (3.00%), while 5 year fixed rate mortgages hover around 3.29%. As Principle Broker Vince Gaetano alludes to in the Financial Post article, those with variable rate mortgages sitting at Prime – 0.2% or less (2.8% or less) are doing very well for themselves, and have no incentive to renew early or lock themselves into a fixed rate mortgage.

What does it all mean?

With many variable rate mortgages at 3% and fixed rate mortgages hovering around 3.30% – Vince Gaetano believes that it makes sense to select the predictability of a fixed rate mortgage over a variable rate mortgage with little or no variable rate discount. The reality is that whether you select a fixed rate mortgage or a variable rate mortgage, you’re going to be obtaining interest rates at an all-time low; you may have friends or family members who took on mortgages at 8% or even 9%.

Whether you decide to select a variable rate mortgage or a fixed rate mortgage, you’re looking at a winning scenario.

As always, if you have any questions regarding fixed rates or variable rates, feel free to comment below. Alternatively, you can e-mail the MonsterMortgage.ca team at Info@MonsterMortgage.ca