Variable Rates are Back in the Game

For the last couple of years variable rate mortgages have been out of favour as the Bank of Canada was raising it's overnight rate to try and slow inflation.

Today inflation is close to the BOC's acceptable range and it's overnight rate has dropped considerably, allowing banks and others to drop their variable rates in step.

Today for insured mortgages the 5 year fixed rate is, generally, just under 4.5% while the variable rate is just around 5%.

For uninsurable mortgages the rates are slightly higher, with 5 year fixed around 4.8% and variable just under 5.5%.

Note: these rates are not guaranteed and may be higher or lower based on your particular circumstances.

In my mind once variable gets withing about 0.5% of fixed it's time to have a good look at variable rate mortgages based on their particular benefits, particularly the lower interest penalty you may have to pay if you break your mortgage early, as many people historically do, and the ability to lock-in to a fixed rate if interest rates look to go higher or fixed rates decline substantially.

So have a conversation with your licenced Mortgage Agent and find out your options.

I'm Steve Willson, a licensed Mortgage Agent Level 1 in Ontario. These opinions are my own. You can reach me through my website stevewillson.com