Zoocasa
Real Estate Sold Prices
Calculator
Map
Property Trends & Insights
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
  • Real Estate News
Zoocasa
Home Mortgage News

Mortgage Shoppers Eyeing Variable Rates

Zoocasa by Zoocasa
November 26, 2013
in Mortgage News
2 min read
Share
Tweet
Share
0 Shares

By RateHub.ca

This month, we’ve been focusing a lot of our content around alternative mortgages: second mortgages, self-employed mortgages, bad credit mortgages, etc. But there’s a lot happening with mortgage rates that we haven’t dived into. Perhaps the biggest thing worth mentioning is the current spread (difference) between fixed and variable rates.

For the first time in two years, the difference between discounted fixed and discounted variable rates on our site is up to a full percentage point. Just six months ago, 5-year fixed rates were as low as 2.64%; today, they’re up to 3.39% – a 0.75% increase. Variable rates, on the other hand, have gone down. January saw 5-year variable rates at 2.55%; today, they’re sitting at just 2.40%.

Variable rates’ downward trend has been spotted by mortgage shoppers across the country. “Our Vancouver office has noticed more people asking questions about variable rates, and more than 50% of our clients are now choosing them over the fixed,” said Chris Rempel, a mortgage broker with True North Mortgage. We’ve seen a similar trend on our site, for obvious reasons.

By choosing to go with a 5-year variable rate of 2.40% today, you could be saving 0.99% off the best 5-year fixed rate (3.39%) on our site. On a $391,820 home purchase (the current national average home price according to the Canadian Real Estate Association) with 20% down, that’s a difference of $158/month or $1,896/year – not exactly chump change in a new homeowner’s budget.

Aside from the obvious savings, however, there is of course the risk that your variable interest rate could rise. Historically, we can see in the chart above that discounted variable rates have been lower than discounted fixed rates for the past five years. But the risk tolerance a buyer has will come into play, when making the decision to go fixed vs. variable.

Before you decide, take the time to run a few scenarios. Using the example we just mentioned, let’s assume you went variable and that your rate has remained relatively unchanged for two years. What if your rate jumped up a percentage point after two years? You’d have to start paying that extra $158/month, after all. But had you gone fixed, you would’ve been paying that amount all along.

Again, if your risk tolerance is low or cash is tight, and you’d prefer to rely on a set mortgage payment coming out of your budget each month, a fixed mortgage rate may be a better option. But don’t forget to ask yourself: Would you be more upset paying more each month in a fixed rate mortgage, or if your variable rate increased and you paid more monthly down the line?

Previous Post

How much are homes selling for in Toronto?

Next Post

Savers & Spenders: 2013 Mortgage Stats [Infographic]

Zoocasa

Zoocasa

Zoocasa.com is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings on zoocasa.com or download our free iOS app.

Related Posts

Reality Check: Interest Rates Are Rising, Securing A Mortgage Now is Best for Buyers
Affordability

Reality Check: Interest Rates Are Rising, Securing A Mortgage Now is Best for Buyers

April 22, 2022
No Change to Bank of Canada Rate in October, Even as Inflation Burns Hot
Bank of Canada

No Change to Bank of Canada Rate in October, Even as Inflation Burns Hot

October 27, 2021
Bank of Canada Announcement: Ultra Low Rates to Stay as Economy Recovers from COVID-19 Impact
Bank of Canada

Bank of Canada Announcement: Ultra Low Rates to Stay as Economy Recovers from COVID-19 Impact

April 21, 2021

Blog Search

No Result
View All Result

Recent Articles

Five Fixes to Maximize Property Value Before Selling Your Home

Five Fixes to Maximize Property Value Before Selling Your Home

May 20, 2022
The Most Viewed Homes in April 2022

The Most Viewed Homes in April 2022

May 18, 2022
Entering a Balanced Market Spells Relief for Many Buyers: CREA

Entering a Balanced Market Spells Relief for Many Buyers: CREA

May 16, 2022
New Owner of the Cheapest Home in GTA has Big Plans for Her “250 Square Feet of Paradise”

New Owner of the Cheapest Home in GTA has Big Plans for Her “250 Square Feet of Paradise”

May 13, 2022
first-time home buyer programs and rebates

Featured Listings (Updated Weekly)

Updated: 7 Houses Under $900,000 For Sale in Mississauga

Updated: 7 Houses Under $900,000 For Sale in Mississauga

May 11, 2022
Hidden Gems in London, ON Currently Listed for Sale Under $540,000

Hidden Gems in London, ON Currently Listed for Sale Under $540,000

May 6, 2022
Updated: Cheapest Toronto Homes Currently Listed for Sale Under $1,000,000

Updated: Cheapest Toronto Homes Currently Listed for Sale Under $1,000,000

May 3, 2022
The Cheapest Toronto Condos Currently Listed for Sale Under $600,000

The Cheapest Toronto Condos Currently Listed for Sale Under $600,000

May 2, 2022

Social Media

Newsletter Sign-up

Join a community of 130,000+ subscribers. Don't miss important real estate news, market data, and buying and selling tips.

About Zoocasa

Zoocasa.com is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions.

Newsletter Sign-up

Join 130,000+ weekly subscribers. Don’t miss important real estate news, market data, and buying and selling tips: sign-up here.

Social Media

Zoocasa Tools

MLS Listings Canada
Search Sold Listings
iOS App
Android App
Find an Agent
Contact Us

  • Homes & Real Estate Properties
  • Terms of Use
  • Privacy Policy
  • Contact Us

© 2015 - 2022 Zoocasa Realty Inc., Brokerage

  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
  • Real Estate News
No Result
View All Result

© 2015 - 2022 Zoocasa Realty Inc., Brokerage