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Originally Posted by Azure
Is that because people are just naive? Lots of opportunity within a 10 year period to sign a loan at 2% interest rates. Why not go for the max length? Never understood the variable rate thinking.
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Quite simply locking in transfers risk from you to the bank. In general you pay a premium for other people to take on risk. So in the absence of your lifestyle being significantly impacted if your variable rate rises over time you are better off taking variable.
I will add that when rates hit the lowest levels ever during a pandemic the above probably does not apply and locking in to mitigate risk probably made sense.
In the US the Fed subsidizes 30 year rates and the terms and conditions for leaving and refinancing so longer term fixed rates at reasonable rates are available that Canadians don’t have access to.