5 year Rates Drop Again. Should You Lock In?

With many lenders and banks lowering their 5 Fixed rate to 4.99%, the question more and more consumers are asking is, “Variable or Fixed Rate what should I do?”
With variable rates at prime plus 1.0% (or 4.50%) and an expected rate decrease in January what is the consumer to do.

If you lock in for a longer-term fixed rate mortgage, you will have the stability of knowing exactly what your payment will be month after month. This mortgage fits the bill for most first-time home buyers.

If you choose a variable rate mortgage, you can benefit from an expect rate drop in January 2009 but are also risk having your mortgage rate go up if the Bank of Canada rate should rise.

In the long run it has been proven that you will be better off with a variable rate mortgage, short term rates are almost always lower than long term rates. If you can handle you mortgage payment sometimes being higher and also lower then this is the mortgage for you.

For those consumers that either want the certainty of a fixed payment month after month or would be worrying what the rate are every day I would choose that fixed rate. No stress, just regular payment. If you want to save some interest payments without the possible movement of the variable mortgage, choose a weekly or bi-weekly payment.

Need more of your questions answered, find yourself a good mortgage agent who will explain all of your options to you at no cost. Some brokers depending on your credit also have some unpublished rate specials. For instance our current variable rate is 3.95% or prime plus .45% and our 5 year rate is 4.79% with a 90 day rate hold, 30 day rate hold is 4.59%.