When you ask Ranjit Dhaliwal whether now is the time to let a mortgage float at a variable rate or lock it in at a fixed rate you normally get a straight answer.
Like most mortgage brokers he’s been heeding warnings from the Bank of Canada and Federal Finance Minister Jim Flaherty to lock in before record low mortgage rates start rocketing up.
After over two years of those warnings, the sluggish economy has the Bank of Canada backtracking – even suggesting the next move for interest rates is down.
Dhaliwal says deciding right now between a fixed and variable rate mortgage is a toss up.
“It depends on your individual circumstances.”
Variable rate risk
Here’s what he means: with the variable rate at about 2.5 per cent and the five-year fixed rate topping 3 per cent, there’s no question borrowers would have – and will be - paying down a bigger chunk of their principle by sticking with a variable rate mortgage.
But floating rates can change quickly and it’s important to understand the riskRead More »from Fixed or variable mortgage? Flip a coin