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Fri Oct 23, 5:12 PM) Y7 X/ O/ y9 ?2 p& G& p
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. 9 P* {# R+ ?/ I% p0 V- C
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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. + _, L9 \+ c$ K/ n; W
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A fixed rate locks the borrower into a set interest rate for a certain period of time.
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That gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment. ( x% O) T7 o: w9 w G a
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Variable rates change along with interest-rate moves.
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6 ?3 F# O5 }5 R- a) L+ s% wBMO 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 }( B8 j+ q) h
" s1 A& R0 h7 g, ~ gBMO 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 p; Z2 w+ b* z! v; w, G
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The bank added that the current interest environment is similar to both of these periods.
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, A! D: T0 L/ I8 C( K+ ]"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. 0 H0 U/ ]( |& X
+ C* [& k, I: }1 k# D8 F9 c5 R"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. % z8 ]+ }) m* G0 m1 Q* V: E
7 E% l9 u2 s. h/ D- _) v2 rAs 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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