Toronto Real Estate Buyers Face A Dilemma – Go Fixed VS Variable

First, maybe an explanation… variable rate mortgages are calculated based on the bank prime rate plus or minus a certain factor. That factor will vary with the economic circumstances we’re in. A fixed rate mortgage means that the interest rate is ‘locked in’ for a certain period of time, most typically five years.

In the old days, prior to the summer of 2008, the choice for many people was simple. Take a variable rate mortgage where the rate was Prime MINUS 0.75%. People who chose that option back then are laughing now… their rate is about 1.5% (prime is currently 2.25%).

Today however circumstances have changed. Fixed rate mortgages are at historic lows (in the high 3′s) and the way the variable mortgage rate is calculated has changed 180 degrees.

Listen to my guest George Christopoulos from MortgageBrokers.com discuss the two options in a recent Real Estate Minute podcast interview.

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