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Fri Oct 23, 5:12 PM6 X$ O" @3 M7 I( @9 T
By The Canadian Press& T. x4 s% d! s0 F& L1 U
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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. / Q! E* R3 }* _. C! Z3 Z+ x" u6 p) N
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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. + [5 l* w( O- |
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A fixed rate locks the borrower into a set interest rate for a certain period of time. 1 O( \1 k3 C2 q$ V: A6 T+ t, d
4 i% x4 j6 @0 ^' E2 g) RThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment. 2 k# j: Z; Q, R. C1 v
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Variable rates change along with interest-rate moves. 4 G$ i' _8 q R( h$ U0 v
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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.
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5 b; G* W+ \8 Z+ v1 r4 B4 IBMO 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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The bank added that the current interest environment is similar to both of these periods. . A: q) [; k. g8 j
3 J8 T3 s' L3 p1 n/ W% u1 T% S"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. * R0 U! L, b2 u {, f4 \, }
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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."
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Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested.
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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. |
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发表于 2009-10-26 06:48
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