 鲜花( 65)  鸡蛋( 0)
|
Fri Oct 23, 5:12 PM/ q6 Q0 l1 _8 M/ n. N o5 X# ~
By The Canadian Press
; G. B; J- R, E* ^1 i( ?: L
8 @4 w p. c$ l0 n XTORONTO - 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.
7 G: n) H' U( f& Z$ d- X% K
, _8 V8 \, S" s5 |& l, dThe 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. % n( ?2 v5 a& I& c: V$ c& d
V1 C7 `+ t" m
A fixed rate locks the borrower into a set interest rate for a certain period of time.
# N6 c% n, t8 e {4 V
1 r- P$ F! q3 M8 N4 |% S7 nThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment.
% D) n N# k8 n$ ?7 e( _
6 R# J0 H6 W& u4 V. P: hVariable rates change along with interest-rate moves. . Q: x, L* s7 a+ a o6 p8 N, i
8 k9 N/ ]6 n* Z" B7 J
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. 7 b, w3 O2 v1 M& f$ q$ F
0 W, X ?7 Y$ E# N
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. 6 D q$ f2 _& k/ `. b
% d- t! [8 n" H* a2 O- G; a+ E3 z2 E
The bank added that the current interest environment is similar to both of these periods.
! R3 w+ w: [5 {* X4 _! ?. N [1 Z# S3 h' 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. # p$ E6 E. G& X. V8 }
; P1 ]* q2 `: C2 ?6 K"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 F$ a) d; g- o; {
' \! }$ E3 y `Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested. ( d: N* q: W: |: f# Q
" C' c. W: m/ L* N2 l
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. |
|