Both variable and fixed mortgage rates have increased recently.
Variable Rates:
Variable Rates:
- the prime rate has stayed the same at 3.00% and is likely to remain as is for the next year.
- however, the "prime minus" has reduced from an average of minus 0.75% to minus 0.20% or less resulting in a variable rate increase, up from 2.25% to 2.80% or higher.
Fixed Rates:
- fixed rates have also increased a little.
- however, fixed rates are still at a historic low
Should your clients go with a variable rate or a fixed rate?
- the current difference in rate between variable and fixed rates is about 0.64% .
- previously the difference was about 1.25%
- with the fixed rate you know your rate for the next 5 years and fixed rates are not likely to go down much further.
- with the variable rate the prime could go up in the next year or so and although you can convert to fixed at anytime without penalty fixed rates will have gone up when you decide to convert or you wouldn't have decided to convert.
- so the answer is there is very little difference whether you take variable or fixed rates right now. The variable rate will save you about $1,600 per year ($133.33 per month) on a $250,000 mortgage "if" the prime rate doesn't go up early in the 5 year term.
Best regards,
Ritesh JoshiYour Next Door Realtor
647-281-3424
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