 鲜花( 65)  鸡蛋( 0)
|
Fri Oct 23, 5:12 PM
8 C# `1 d- c8 h4 M3 M CBy The Canadian Press. h& I6 k1 _" x6 ?) b! |' B& X
8 T' T7 M9 E N$ R. ^; x/ g) r
TORONTO - 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.
/ Y6 h8 I- Q: E" e! a0 d) G5 E! V, s* V2 Y9 t
The 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.
8 y3 ?! [5 k0 \/ }) z, w) p% O8 L0 {! J9 Y, V
A fixed rate locks the borrower into a set interest rate for a certain period of time. 2 u6 F4 y" p: C, P: l& O# R/ X2 X
) {: v' A" c2 Y# oThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment.
) I3 n& x6 y8 v+ x) O( P2 |( W% [+ L
Variable rates change along with interest-rate moves.
$ p5 H9 A4 F* D* K+ n& p& `5 c+ ]4 Z) y! i' J5 i9 }4 L
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. $ n Y o4 K1 `
A6 C* Q3 z V2 |) Z7 o tBMO 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. & X) ]2 U. g0 r. i/ G
; ^" J, e9 Y# D/ t' |; Z
The bank added that the current interest environment is similar to both of these periods.
& H c+ o' g% Q+ Z& _$ U
/ d8 @, [( ~0 W' b$ ]"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 m* N& [; Q& z8 D- \) |! `5 f/ M- M6 w4 u
"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."
4 }6 r" Y) B! O* J. |
4 f; i% d5 N# F$ j' {% B2 ^Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested. 6 R4 f) m* H6 N P5 c3 n9 j% u
( R$ i! M) R+ z% \( {- p6 _
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. |
|