Fixed-rate or variable-rate?

This is a question that consumers have been struggling with over the past several years while we have been enjoying historically low interest rates. With the Bank of Canada now widely thought to have concluded a series of seven interest-rate hikes in the past year, it's time to assess the two strategies.

Should you choose a fixed or variable mortgage loan? It all depends on your tolerance to risk in the face of interest rate fluctuations. A variable rate is generally more advantageous than a five-year rate on a given date. However, the variable rate may vary in time—as its name indicates—whereas the five-year rate remains unchanged for the entire five-year term. With the variable rate, you benefit immediately from rate decreases, but you may be affected if the rates go up.

Many variable-rate mortgage holders may regret not having locked in at a safe fixed rate, but mortgage brokers say that most of them fare about the same as their locked-in counterparts. By managing the variable rate product, some consumers have been able to pay down their mortgage substantially. Experts now agree that over the past ten years one would have paid less interest by taking a short term or variable rate mortgage versus a longer term mortgage. some people prefer the stability of a fixed rate over the potential cost savings offered by a variable rate. Choose your mortgage carefully. Ask a more broker for help before you sign the deal.

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.

Fixed Doing Better Than Variable / Adjustable In UK

Britons are more inclined to take out fixed-rate mortgages, despite the fact that most analysts anticipate that the base rate of interest will be cut again soon. When it comes to maintaining their mortgage payments, the majority of Brits prefer fixed rate deals, according to new figures from Abbey. Borrowers are adapting to changes in the market and those plumping for the certainty of a fixed rate are choosing a product for five-years as opposed to the previously popular two and three-year options. Tracker mortgages also grew in popularity this month, with 12 per cent of respondents saying they would go for a tracker option. The research also revealed that people in Wales and the south-west are the most likely to choose tracker mortgages. Research released by Abbey showed that two-thirds of the British home owning population would find it difficult to choose their next mortgage if they were remortgaging their house tomorrow. Real Estate Market is slowing down in UK.

Variable vs Fixed

Just like always, variable rate mortgages are offering bigger bang for your buck in Canada. Prime rate remains 6% and at 5.1% (prime -.90%) variable rate mortgage is the best interest rate available in the market for a mortgage that has a term of five years. The best rate available on a five year closed fixed rate mortgage varies from 5.45% to 5.65%. While adjustable rates have remained the same for over a year, fixed mortgage rates have consistently risen. Before April 2nd, 2007, the fixed rate was lower than the adjustable at 4.99%.

ING - UNMORTGAGE

Unmortgage is just another mortgage product offered by ING Direct. They have confused many people with this new "brand name". It's not not a reverse mortgage, its not a mortgage out of this world, it is just another mortgage product. It does have some good features attached to it. ING DIRECT UNMORTGAGE offers many payment frequencies, which include monthly, bi-weekly and accelerated bi-weekly. Many other banks offer the same type of options. In fact, many lenders also offer the option of weekly payments. Unmortgage also offers flexible terms (1-10yrs), amortization periods and prepayment options just like any other lender. ING also advertises best rates and terms, but I don't think they can beat all lenders out there all the time. If you are looking for a mortgage that offers the best interest rate at good terms, I recommend that you talk to your mortgage broker. The Mortgage Group in Vancouver has access to many lenders and mortgage products including ING's UNMORTGAGE.

Canadians making bad mortgage choices?

RBC (Royal Bank) released it annual homebuyers survey few days ago. According to the survey many Canadians seem confused about the mortgage choices available to them, especially when they have to choose between a fixed rate mortgage and a variable rate mortgage. RBC's survey shows that most people will stick to the fixed rate mortgage products even when a "safe" variable rate mortgage is available that will save money. Majority of people find it difficult to choose between a fixed rate and a variable rate mortgage. The top reason for opting for a fixed rate mortgage is the preference for payments that don't change every month. Some 76% respondents believe that their mortgage payments will change each time the prime rate changes, even though its not true. Variable rate does not necessarily mean a variable payment each month. A mortgage broker can be a great help when it comes to understanding you mortgage needs. Ask your mortgage broker about the benefits of variable rate mortgage products.