Quote:
Originally Posted by Geraldsh
My son is shopping for a mortgage and asked for a 5 year fixed rate. The bank advised him to limit the fixed term to 2 years - what would you advise?
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Well, I would suggest doing a risk/reward analysis. Something that I think a lot of people who went variable last year obviously did not.
What can he afford now? What can he afford in 2 years, 5 years?
If he expects his income to rise a bit in the next couple of years or if he has flexibility in his budget, then it might be worth the gamble to go short. However, if he is maxed right out, I would not suggest anything that could result in increased payments in two years.
I'm not making any predictions, but there is still lots of room for rates to go up.