According to an article published by the Globe and Mail on October 31st, variable rate mortgages are just not worth your while any more. The banks haven't been making enough money on variable rate mortgages and thus have taken away the discount traditionally given on a variable rate mortgage.

Variable rate mortgages are now being sold at the same rate, the prime rate of 3%, as fixed rate mortgages. Shopping around might yield a small discount but it doesn't seem as though the hunt for a deal would really be worth your while these days.

Global economic uncertainty and slow growth results in you’re paying around 3% for a four-year term fixed mortgage if you can swing the term. Veteran Mortgage Broker Peter Majthenyi agrees, "Today, I just cannot in good conscience put a borrower into a 3 percent variable when for the same rate I can put them in a four year fixed". But ask him a year a ago and Mr. Majthenyi would have advised his lenders to go with a variable rate mortgage.

Why the change of heart? Two reasons mainly: (1) The cost of fixed-rate mortgages fell with the turmoil in the stock market this past August and September, and (2) Big banks decided to clamp down on discounts given to customers choosing variable rate mortgages because they simply weren’t profitable.

So put aside any pre-conceived notions you have about variable rate mortgages being cheaper. It’s just not worth the future risk for small savings today. As the economy starts to gain strength and the prime rate increases you'll face a hard road of increasing rates.

To read the original article visit the Globe and Mails website. Please feel free to contact me with any questions you may have about the Barrie real estate market or this important information and be sure to forward this article to any family and friends who may find it interesting.

Sincerely,

Peggy Hill