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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; f" X9 w3 @+ j
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. / O/ z7 ^/ ^% v" b; l* V. }
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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. 0 \" M/ w( \5 b

- x% A& P6 p; A1 Q! Q& NA 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. ' [8 F2 `/ X" x5 d! ]
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Variable rates change along with interest-rate moves.
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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. 6 [+ G) [) u" ?8 p6 y
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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.
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The bank added that the current interest environment is similar to both of these periods. 5 ^0 n* c. M- C1 y! V9 z* y
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"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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) o4 [  u' F8 N"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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/ d* @$ @4 |" t/ i! T4 v' j3 DCanada has been in a long-term declining rate environment since the early 1980s, the bank suggested. & b; x* [8 D' T/ ^9 a
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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 11:28 | 显示全部楼层
理袁律师事务所
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发表于 2009-12-2 14:02 | 显示全部楼层
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