Date: March 29, 2021

As you may know Over the past few months we’ve seen record low rates. Between January and February we’ve seen a dramatic drop in mortgages interest rates and then just as fast we saw them increase. In fact, March we saw the largest mortgage rate increase in a 9 day span in over a decade.

There’s a lot of talk about rates continuing to increase, over the past few weeks that has definitely been the case. We do however need to keep in perspective that the fixed rates are still very low and well under 3%.

Now, since we’ve had so much movement in the fixed rates we have now seen many people are now open to looking at variable rates.

So let’s talk about how variable rates work for you can make the decision if they are right for you.

We find that there is still some confusion around variable rate and so let’s try to clear that up. When you take a variable rate you are agreeing to the discount.

For example your interest rate is Prime minus 1%

As of today, your interest rate would be 1.45% ( Prime 2.45% minus your discount 1%= 1.45% )

The fluctuating variable will always be the Prime Rate. Example-If the Bank of Canada increases the Prime rate to 3% your rate would be Prime 3% minus your discount 1% = 2% interest rate.

Just remember if you choose variable you are locking in the discount for the 5 year term and if prime moves your rate will move and you need to be ok with that. My suggestion would be to have a talk with your broker about your prepayment options and using those to help you take advantage of the currently low variable rate.

If your rate is over 3% we should talk and look at your options.

Until next week I hope you all have a great one take care

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