Rob Carrick is one of my favourite financial columnists and in his article Variable-rate still the cheaper mortgage option from yesterday’s Globe and Mail he solidifies a belief that I have long had, that maintaining a variable rate mortgage is the cheapest option in the long run.
Although we are currently experiencing a period where the gap between variable and fixed rates is at historic lows, and many individuals are opting for the safety of a set rate for a period of time, variable rates have been cheaper than 5-yr fixed rates 90 per cent of the time over the last 25 years according to the article.
Historically speaking, today’s spread between fixed and variable rates is a joke. The gap between variable-rate and fixed-rate mortgages in 2010 and 2011 averaged about 1.7 points, the Canadian Association of Accredited Mortgage Professionals said in its recently released annual consumer study. Mr. Larock said variable-rate mortgages have been cheaper than five-year fixed-rate mortgages 90 per cent of the time over the past 25 years.
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Whether you opt for the certainty of a fixed rate or prefer getting the absolute best deal you can, now is a great time to review your mortgage with your mortgage broker and discuss all of the options available to you to minimize the interest you pay and even pay off your mortgage sooner.