Quote:
Originally Posted by blankall
I think the problem with your analysis that I'm having is that you are relying too much on what's happened in the past. You are using the fact that interest rates stayed low for longer than expected this time to suggest that trend will happen in the future.
Don't get me wrong, I agree with you, in many situations, a variable is better. I have a variable myself. I got it about 14 months ago. At that point fixed was at 3.6, variable was prime -.9% (effective rate of 2.1%), and the general consensus was rates would stay low for another year.
Now with variable at prime -.6%, fixed at around 3%, and much more uncertainty in as to interest rates in the future, I'd go fixed right now. Compared to a year ago, there's more uncertainty with rates, and the spread between fixed and variable is much smaller.
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Really all anyone, including the bond market, has to go on is the past.
I'm not going to argue at all that right now might be one of the times to go fixed. As you say, the spread is really tight between fixed and variable, and interest rates dropping seems like a slim to none possibility at the moment. The downside of getting it wrong right now is quite small, as you say -.6%. The possible upside is a lot more than that. If I was up for renewal right now I'd very seriously consider a 2.99.
I still think 3.9 for 5 years is ######ed...