Posted on: 12-08-09 12:06:53
Which one is experts suggesting these days ? ....
I feel fixed is the option we should go with ... although I do see a savings from variable rates, but my personal opinion is that savings will not last long... and may be by mid 2010 rates will start going up, resulting in giving away all the benefits ....
Some are of the belief that recovery is not that close, and rates are not expected to go up anytime soon... if that holds true, sure there is a huge savings with variable rate mortgages....
What do you feel ?
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Vik
You have kind of answered the questions yourself, but still....try to make your decision without linking interest rates to economic recovery.
Interest rates can go up for a variety of reasons, including stagflation, credit risk, collective loan-sharking by the top lenders, etc.
So keep recovery out of the equation and then ask yourself whether you expect interest rates to go up or down over the term you are considering.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
You have kind of answered the questions yourself, but still....try to make your decision without linking interest rates to economic recovery.
Interest rates can go up for a variety of reasons, including stagflation, credit risk, collective loan-sharking by the top lenders, etc.
So keep recovery out of the equation and then ask yourself whether you expect interest rates to go up or down over the term you are considering.
Are the factors like Economic recovery, BOC rate, Bond rates, Mortgage rates not linked? Why do you see mortgage rates that low these days? I guess, because of the economic conditions... what might lead it to go up or down in near future? most probably the economic conditions...
Well, thats my view point. I may be wrong. I couldnt find answer myself, thats the reason I put it up here for discussion....
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Vik
In the past variables were very attractive..
In 2008 may the prime was 4.75
Fixed was 5.19
Variable was 0.7 to 1 below prime
I got 0.95 below prime which worked to 3.80
Today prime is 2.25
Fixed is 3.85
Variable is 2.75
As it shows the variable rate is going at a premium..the equation has changed.. in the banks favor and will not revert back in ur favor ever..
At todays rate fixed is the best option because interest rates can jump quickly and a 1% jump can take as little as 3 months...
Interest rates cannot fall any further so u are only looking at risk rather than reward...
I tihnk everyone knows the rates will go up, but when.
Mid 2010 .. then a fixed sounds sensible.
But what if rates really dont go up until say mid 2011. Then maybe variable would be nice to stay at.
I had to debate this for a while and for now I stuck with variable as I have an excellent rate. Maybe its a wrong decision .. too much greed may cost me. Lets see.
It's less about the actual percent and more about your own comfort level and mental peace.
Do you want a fixed payment for 5 years? Do you prefer knowing exactly how much you will pay for interest over 5 years? Go Fixed.
Willing to take risk? Fine with rate fluctuation? Will get good sleep even if prime jumps like crazy? Go Variable.
I agree wall-e and sville.... be it variable or fixed, rates these days are really low.... now the matter is more of own comfort level.... like wall-e said, temptation to make use of dirt cheap variable rates to the fullest, makes us think twice before locking in equally good 5/4 yrs fixed rates.....
I am still torn between the two choices... will update you guys once I have made up my mind.... I am leaning more towards fixed though.......
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Vik
