Quote:
Originally Posted by dubc80
Ok, seems to be lots of good banter in here among people more knowledgeable than me.
So... here goes!
Currently on a variable mortgage at prime minus 1.26%.
My rate has climbed from 1.19% in March to 4.19% currently.
4 years left in my term.
They are offering 5.14% for 5-year fixed.
What do you experts say? Convert? Or ride it out?
Fortunately for our family, we are not one of those families who took the max mortgage available and live well within our means. Variations in payment are annoying, but not crippling.
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Check the 2/3/4 yr fixed rates - that might be a better way to hedge.
Are you pretty sure you'll stay at that house for the next 5 (or whatever years)?
When did your banks prime rate last change? Another increase seems nearly certain by the end of the month. Beyond that nobody knows.
Personally I think it'll be a bit of a wash between those two options over the next few years, but there is still way higher downside risk than upside reward at the fringes of the probability spectrum.
Ask yourself what you'll regret more - #1) a couple extra years where 5.14 is 2-3% too high...or #2) several years creeping to 7 or 8 or 9%?
Ultimately I fall back on my premise that you probably won't fully realize the 'savings' of variable for another decade or more, but you could feel the pain very soon (and also down the road).