The Ongoing Debate of Fixed Versus Variable Vancouver Home Mortgages
December 10, 2012 by Adil Virani
Filed under Home Series, Latest News, Latest Rates, Mortgage FAQ, Recent News, Selling Your Home
The Ongoing Debate of Fixed Versus Variable Vancouver Home Mortgages
If you ever want to get a rowdy conversation going then all you have to is blurt out – ‘Which is better – fixed or variable rate mortgages?’ When it comes toVancouverhome mortgages, you will get a host of different opinions from even the pros.
It’s an ongoing argument that of course always mirrors rates are going to go. We can make fairly accurate educated guesses but since we aren’t seers, the future can spin on a dime because of wars, natural catastrophes and political upheavals.
The best we can say is that there are pros and cons for going either route. It all comes down to own personal financial circumstances and your best educated guess for what the future holds for Vancouver home mortgage rates.
At the moment most people seem to be favouring fixed mortgages because the rates are so low, and there is the likelihood that at some point in the future they are going to rise. However, there are number of people who say rate risk has lessened and that there is some support to go with a variable mortgage rate.
There are several reasons why some experts support either belief.
If you don’t believe or foresee rates as rising any time soon then variable rates might be more appealing for you. However, as we all know the economy in Canada can be unpredictable and can even surprise the experts.
A gloomy forecast can turn out just as completely wrong as a rosy forecast. And, of course, these effects all trickle down and affect the Vancouver market. So it all boils down to whether you are optimistic or pessimistic about the rates changing, and by how much and what type of prediction or forecast you are making.
Although some experts point out that variable rates have shown to have been historically cheaper, others counter this argument by saying that the economic climate model used to support this position simply no longer exists. The reason is that mortgage rates were higher and the model was pointing to a downward trend in rates, which is the best scenario in which to adopt variable rates.
However, we have hit the bottom rung of mortgage rates and they are either going to continue going sideways or are going to most likely inch upwards. Many experts feel that new homeowners are better of going with a fixed rate at the current time.
At least that is the information upon which we might be basing this today. Both the mortgage market and the economy are quite fluid and constantly in flux. It also depends on how long you want or need your mortgage.
In a theoretical model, the rates could still drop, remain somewhat constant or creep upwards. The best advice is to consider both the pros and cons and then follow through with your best educated guess as to deciding on fixed or variable.
