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ZT-BMO study says variable-rate mortgages better deal for borrowers most times

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发表于 2009-10-26 06:48 | 显示全部楼层 |阅读模式
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Fri Oct 23, 5:12 PM
, }: j' o" H  w; a% d, dBy The Canadian Press# F) @: |# Y& `5 I- t" Q* `

# H5 B; I" }' K3 Q, ~* A( JTORONTO - Fixed mortgage rates may help you feel secure in your budgeting, but the Bank of Montreal (TSX: BMO.TO) says the more volatile variable rate mortgages will save you money in the long run.
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6 u2 q  y, R4 Y- f( c) o- q7 E& b% NThe bank put out a report Friday showing that, over the past 30 years, variable-rate mortgages have been more cost-effective about 82 per cent of the time. That may come as a surprise to some after studies have shown many Canadians prefer a fixed-rate mortgage. 4 i4 q  ]% d/ a: v: W# K" d
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A fixed rate locks the borrower into a set interest rate for a certain period of time.
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+ S0 \( [3 f& |) f" I$ R: HThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment.
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' w4 q: \. b3 @8 B5 s: s. NVariable rates change along with interest-rate moves.
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4 a4 z/ H6 _0 |# ^7 B/ z7 gBMO said the Bank of Canada's overnight lending rate is at its lowest possible point now, which could mean there are fewer benefits to a variable rate in the foreseeable future.
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! W$ ]/ e4 [# I- ~BMO highlighted two historical periods when fixed rates were considered beneficial - in the late 1970s and late 1980s - and both were just before interest rates started rising again.
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' J# Q+ s3 V( [% Q& a& i7 eThe bank added that the current interest environment is similar to both of these periods.
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"Short-term rates are at extreme lows and pressure is likely to build for higher rates in the year ahead," said deputy chief economist Doug Porter in the report. % U( |) Z' o3 S6 d, t7 {
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"The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important issue." 8 }- ~( S+ A/ @- F/ [0 ^9 p
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Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested. + T; E0 \4 l* _: |

" W% L* H. {* a5 D9 V3 s$ HAs a result, the spread between five-year fixed mortgages and variable mortgages has been pushed wider in recent years, and is now near an all-time high.
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发表于 2009-10-26 11:28 | 显示全部楼层
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发表于 2009-12-2 14:02 | 显示全部楼层
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