Quote:
Originally Posted by heep223
Nobody knows when rates will go up. But they will go up and possibly significantly by the end of a 5 year term. I just can't see how you'd recommend someone to get a variable mortgage when rates are at rock bottom. Seems like the kind of thing someone would look back on when they're in year 4 of their 5 year term and wonder what they were thinking.
It costs 50-75bps to lock in a rate at 2.89% for the next five years....yes please. Just seems short sighted not to do so.
But then again I'm not a mortgage professional. Do mortgage brokers get paid differently whether they sell fixed vs. variable?
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People were asking the same question 5, 4, 3, and 2 years ago about the variable vs. fixed. The 5/4/3 year ago variable people have now probably won out. I went fixed but I like to take risk on my investments, not on my payments. It's really about knowing what you're getting into then deciding how you feel at each payment level and making a guess into the future. As each month passes we're closer to the "rate increasing" environment. That said, bond yields have been crushed in the past little while so if we had this conversation 2 months ago, today one could say "rates are going down". Fixed is priced off a spread over bonds, variable is priced over prime. But. . . That spread can depend on a lot of things.