Quote:
Originally Posted by MarkyMark
Is a variable rate pretty risky at this point in time? At 2.45% compared to the 3.35%ish that fixed rates are at it's quite a difference in your monthly payments.
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YOu just gotta ask yourself how much risks you can accept.
Say you're signing on for 5 yrs. How many rate hikes will it take before your 2.45% variable rate climb high enough to meet your 3.35% fixed rate?
In the past, it is somewhat common for the Central Bank to hike rates by 25 basis points each time. So it'll take 4 rate hikes before your variable rate mortage becomes more expensive than a fixed rate mortgage.
Next you factor in over how much time that rate hike is going to happen. If it takes 2.5 yrs for your variable rate mortage to reach 3.35%, and assuming the interest rate continues to climb at the same pace, you are still more or less breaking even compared to going with a 3.35% fixed rate to begin with.
The problem is, none of us have a crytal ball that can foresee the future.