 鲜花( 65)  鸡蛋( 0)
|
Fri Oct 23, 5:12 PM- ]! k# w1 R* J
By The Canadian Press
0 W t- s( m1 c1 F- e
% w0 ]9 i5 `" rTORONTO - 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. & \- k- P. b# L' s1 H
# e4 ]/ X1 O0 h$ @9 eThe 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. $ V0 l# E8 l! h$ Z# a, w+ H9 m; L
& P3 ~ d5 f n3 A# V, FA fixed rate locks the borrower into a set interest rate for a certain period of time.
8 N4 }' ]) f d/ v$ A
4 C) n, k/ \( U; I9 K' rThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment. ( P/ R8 y; U: u; P! U
9 C3 p' m* u8 V8 }3 xVariable rates change along with interest-rate moves.
2 f9 `! t' @) @; c! T2 ~3 V+ z: `# h
BMO 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. % e9 Q: W8 ~, P- j3 L
0 l" G5 I+ P$ e+ [& f j4 ^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. / |4 l/ k+ @7 k, b
7 T, u. q, {! T; n6 I' h& t: }
The bank added that the current interest environment is similar to both of these periods. 9 k1 P4 F. ?- X" m$ s/ g+ H
( F( h+ i9 _4 P"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. 1 j! H& Z [% \2 z' y
+ \# T. R) M- l3 Q9 \. I"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."
( N4 \, a# Y% m5 u
' ?) n3 O/ q1 m3 v2 S9 qCanada has been in a long-term declining rate environment since the early 1980s, the bank suggested.
, P' [: z$ j, a. x5 j. a; P* t! j, C' L* V s
As 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. |
|