Over the last few years I have been asked to make predictions on interest rates by the press and consumers. Since my Crystal Ball has been broken for many years I have been reluctant to stick my neck out and instead take the wishy-washy answer of “it depends”. Most people don’t like the answer I give, but then it leads to a discussion about them.
The 3 questions I ask consumers before considering a variable rate mortgage are highlighted in this article at CTV News . This really helps me to understand their interest rate risk tolerance. If there is some tolerance to risk, the second part is the “Numbers.” I love numbers and have been tinkering to develop a tool to help every consumer assess their current situation and come up with a comparison of Fixed vs Variable Rate based on their situation. We recently stumbled across a spreadsheet that will help us do the same calculation. With the last 5 consumers I have compared the fixed vs variable rate calculations with, all have found the information very useful in helping them make a decision.
This was a recent interview Rob Carrick conducted with Will Dunning – Economist for Canadian Association of Accredited Mortgage Professionals which outlines the numbers of Canadians at risk if interest rates increase featured at Globe and Mail.
Canadian’s have been very responsible and should be able to weather any rate increases in the future. A small percentage could get caught if they don’t act soon. With fixed rates dropping and variable rates increasing the spread between the two is returning to normal. This means the savings in Variable rate mortgages is not as a large as it once was and presents more risk if rates increase. Trust the advice of an Accredited Mortgage Professional, let us give you a no obligation assessment of your situation to help you with the decision of fixed or variable.
No Crystal Ball needed!