Quote:
Originally Posted by Izzle
Yeah, you'd need to consider the delta between 5 year fixed and 5 year variable and see if you are comfortable with that delta being your "insurance" piece.
If there is a 100 basis point difference between fixed and variable, then Bank of Canada will need to cut 4 times at 25 basis points before you're breaking even. Even then, they might have to cut 5 times in order for your bet to be fruitful.
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The issue with the Variable/Fixed decision is that the people making the decisions know a lot more about the subject than you do. Plus fixed is controlled by bond markets, which are based on market predictions about where the rates are going. So right now the fixed is significantly lower, because the decrease is already factored in.
I'd still probably go variable right now. I think we'll see a 1% drop over the next year, with all the talk about deflation and recession. I'm not an expert though. I also think we'll see sub 4% fixed by the end of 2024/beginning of 2025.