Should I fix or should i stay Variable ??

[TangerZ]

For what it's worth, a former economics professor of mine (now teaching my sister) mentioned last month to all his students that they should fix their mortgages for at least the next two years. His name is Frank Atkins at the University of Calgary, he is regularly interviewed on CTV Calgary for economy related issues, has published course
textbooks, and he is also a writer/contributor to the "Business in Calgary" magazine publication. Just throwing that tidbit out there, you may want to research more on what his line of reasoning is.

[Clarkey]

Originally Posted by hulkrogan

I'm so pissed at myself for going against my "No fixed mortgages" policy. The 3.6 looked so good/safe at a time when things were still pretty uncertain, but I already feel like a ######. The affordability of my house would be questionable at 8% on the same income, but we aren't going to see that happen.

I'm having trouble interpreting your post (it's me not you), did you lock in or not? Why do you say that 8% won't happen?

[Cowperson]

Originally Posted by hulkrogan

I'm so pissed at myself for going against my "No fixed mortgages" policy. The 3.6 looked so good/safe at a time when things were still pretty uncertain, but I already feel like a ######. The affordability of my house would be questionable at 8% on the same income, but we aren't going to see that happen.

If you can't afford the worst case scenario, then you should lock in . . . .

The affordibility of your payment in a worst case scenario is always the critical factor.

It's accurate to say variable rates are best most of the time but if those are 8% some day and you've lost your house, that's a rather useless observation in your particular, very personal situation.

I don't think we'll see a doomsday scenario on rates though. It's up to you whether or not you can take that chance.

For me, if rates went to 8%, I probably wouldn't care. But that's me. It's not you.

Cowperson

[The Yen Man]

I debated for awhile whether to lock it in at 3.69% or go variable -0.6%. In the end, I went with the fixed 3.69%. In order for me to come out on top, variable would have to go up to 4.29% by year 3, which I honestly doubt it will. But I do like the predictability of fixed, so I figure 3.69% is still a pretty good rate.

[Cowboy89]

Originally Posted by Cowperson

If you can't afford the worst case scenario, then you should lock in . . . .

I think if it's a buying decision and not a Re-Fi, one should re-evaluate why they are buying in the first place if they would be blown out of the water in a worst-case scenario.

[Cowperson]

Originally Posted by fotze

I think we need to define 'worst case scenario'. If you lived your life planning for the 'worst case scenario' you wouldn't leave the house.

Worst case scenario to me, means 20%. If it goes there then completely fiscally responsible people would be fataed and pretty much no one should buy a house. If you bought a stock based on worst case scenario, then you don't even open a brokerage account. If you put money in a savings account, worst case scenario says that the bank will go belly up and just take your money.

More likely than the worst case scenario of 20% is losing your job and not getting a new one for 5+ years, but no one plans their finances on that happening.

Maybe the phrase should be 80% percentile chance of occuring or something like that.

For some, the worst case scenario might be right now.

For others, it might be one or two percent from now.

For you, it's 20%.

The worst case scenario is the place where a payment is rendered unaffordable and they go in arrears . . . . and ultimately would lose their place.

If you can't handle MiG's (variable rates going higher), don't fly in MiG Alley.

Cowperson

[Bill Bumface]

Originally Posted by Clarkey

I'm having trouble interpreting your post (it's me not you), did you lock in or not? Why do you say that 8% won't happen?

I did lock in at 3.6. I say 8% won't happen without my income going up as well. It's tough to imagine a scenario where that would happen.

Originally Posted by Cowperson

If you can't afford the worst case scenario, then you should lock in . . . .

Which is why I did it at the time, but really, I think the odds for the worst case scenario that have me giving up my house are pretty damned low. When you're on one income though and just starting out it's all a bit up in the air. I'm young enough I think I'm dumb for not taking the risk. Worst case I rent the place out and hang out at a relatives house for a while... not all that scary when you get down to it.

For me, if rates went to 8%, I probably wouldn't care. But that's me. It's not you.

Cowperson

I'm assuming since you're much older than myself your debt load is probably pretty small and your savings are pretty high.

I think if you were still under 30 and your mortgage payment doubled you might have to make some changes in your finances. 8% I could keep the house and still live in it, but my car is definitely up for sale and I'm taking a few less trips every year.... which is exactly why I'm choked I scared myself out of taking the variable. As long as I stay employed, things would have to go majorly sideways which I don't see happening.

Originally Posted by Cowboy89

I think if it's a buying decision and not a Re-Fi, one should re-evaluate why they are buying in the first place if they would be blown out of the water in a worst-case scenario.

You'll never get anywhere or have any fun planning for the worst case. I've yet to meet anyone that didn't have their stomach feel a bit heavy after signing their first major mortgage. Usually you're laughing a few years down the road.

[Knut]

If it goes up to 8% I just need to quit drinking.

[anyonebutedmonton]

Originally Posted by TangerZ

For what it's worth, a former economics professor of mine (now teaching my sister) mentioned last month to all his students that they should fix their mortgages for at least the next two years. His name is Frank Atkins at the University of Calgary, he is regularly interviewed on CTV Calgary for economy related issues, has published course
textbooks, and he is also a writer/contributor to the "Business in Calgary" magazine publication. Just throwing that tidbit out there, you may want to research more on what his line of reasoning is.

He is also a royal @sshole... this from a student who received an A in his class.

[TangerZ]

Originally Posted by anyonebutedmonton

He is also a royal @sshole... this from a student who received an A in his class.

I concur...at least to his students.

[albertGQ]

I had Atkins too, but around 10 years ago. I always thought he was a smart guy. He'd even make fun of himself for marrying one of his former students.

BTW, is Will Holden still teaching at the U of C?

[stampsx2]

big bump but don't want to start a new thread:

Anybody locking in their variable rate? The boc has little room to move down. I know the canadian economy just entered a technical recession but wouldn't that mean that it's time to lock in when rates bottom out.

Five year fixed is locking in at around 2.5%.

Trying to get a bit of insight from the expertise at cp.

[PeteMoss]

US rates are likely to go up but the Canadian economy not exactly firing at all cylinders right now I wouldn't expect to see it go up here in the near future.

But I'm far from an expert on this.

[stampsx2]

Originally Posted by PeteMoss

US rates are likely to go up but the Canadian economy not exactly firing at all cylinders right now I wouldn't expect to see it go up here in the near future.

But I'm far from an expert on this.

That's just it. If rates in the US go up then the canadian dollar will drop. That's good for the canadian economy, especially in the east. If oil goes up tomorrow rates in canada will follow.

[keratosis]

I just fixed for 2 yrs. at 2.09%.

[MacDaddy77]

I just locked in for 2 years 6 months at 1.99%

[Oil Stain]

I just locked in for 2 years 9 months at 1.97%.

[MrMastodonFarm]

3 years even at 1.95%

[TSXCman]

These are good fixed mortgages. My broker mentioned 2.59% for 5yr fixed and 2.09% for some of the variable.

[IliketoPuck]

My 2 cents (and worth what you've paid for it):

1. The BOC would look foolish if they raised interest rates so shortly after reducing them. It signals that they do not have an adequate handle on what is required to achieve monetary goals. Tough to act as the calm, stabilizing force in the economy when you change your mind every 2 months.

2. Monetary policy typically takes 6-8 quarters to filter through an economy and fully provide the effects the BOC is looking for.

3. With the economy currently struggling, an argument could be made for additional rate cuts.

4. My personal decision is to remain on a floating rate, and monitor the messaging from the BOC closely in tandem with Canadian economic indicators. At this time, in my opinion, rates are unlikely to increase in the near term.