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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" ]' Y0 |, H% r% R4 T; H7 {+ g
By The Canadian Press
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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.
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" J0 A. T& G1 d, a5 S5 TThe 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.
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) m' V1 d5 ^4 I# V# H( Y+ tA fixed rate locks the borrower into a set interest rate for a certain period of time. : ]1 _' j* D$ ~; q/ w' J* k

. y/ C3 z  H* g) B9 Q4 m* A6 ?! qThat gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment. / n0 x" {9 z% t( g) s, K/ x

9 @1 M1 ?( R- H1 |5 m, YVariable rates change along with interest-rate moves. 8 ~0 G; N' M, O- L  H. N# I

3 u" \# g- ]1 o* p5 HBMO 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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9 N3 F1 G0 _1 D6 WBMO 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. 6 x5 ^+ M4 [2 n! w6 k

( H) W3 K, ]' N9 c: y2 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.
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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." , F+ R1 H  v# H& c8 p
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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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) y8 q3 \2 e( v. w- K+ pAs 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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