Tuesday

Variable / Adjustable vs Fixed

Fixed-rate mortgages are not dropping as fast as central bank rates. Mortgage brokers are able to find a variable-rate mortgage at about 4.75 per cent compared with a fixed-rate five-year mortgage of about 5.84 per cent. The spread, now almost a full percentage point, used to be only a quarter or a half point.

For those looking to buy a house, that decision whether to get a variable rate or a fixed rate mortgage can be very confusing. For that first-time home buyer, obviously the fixed rate is going to be the best solution in these uncertain times. First time home buyer can also lock in the a good low rate for 5 years and expect to have stable mortgage payments, no matter what happens in the real estate market place. If you're somebody who's a more experienced purchaser, who may be a second or third time homeowner, you may want to float with a variable rate. As you know that variable almost always wins over the fixed rate mortgage in the long run.

Many Canadians still believe real estate is a good investment, and their confidence may get another boost soon: The Bank of Canada has hinted that further cuts to its overnight rate may come at its next scheduled meeting on April 22.

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