Variable vs. fixed – which rate has the upper hand?

Houses for sale in Ottawa

However, variable offerings are likely to remain a strong option for both new and existing mortgage clients despite those impending hikes, according to a prominent industry executive.

Chase Belair (pictured top), co-founder and principal broker at online brokerage nesto, told Canadian Mortgage Professional that the advantages of variable rates were such that they could well outweigh the risk associated with rate increases – particularly with the Bank likely to show a steady hand in its rate announcements this year.

“Our best variable rate today [at nesto] is 0.90%, and our best fixed rate is 2.44%,” he pointed out. “You’re going to need the Bank of Canada to work against you six times before you regret that decision from the interest rate perspective.”

Variable rates also remain a popular choice because the penalty associated with breaking them is usually much less severe than that for a fixed mortgage.

While fixed rate penalties are usually calculated as whichever is greater between the interest rate differential or three months of interest, variable penalties normally consist only of the latter.


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