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Are you thinking of taking on a new mortgage? Perhaps you’re thinking of refinancing, and looking at other mortgage options? Whether you’re purchasing, refinancing or even just renewing, the variable rate mortgage remains the main contender of conversation for 2019.

But what about all the economists saying… if you are currently in a variable rate mortgage, then you should rush to ‘lock in’?

The variable rate conversation has gotten a lot of buyers nervous from what they have heard in the media. But let’s take a look at the crowd that is telling us we need to “lock in”:  the economists – those that are employed by profit driven shareholder-owned institutions that directly benefit from you locking-in your mortgage (the banks) via instantly increased profit margins and massively higher (up to 900% higher) prepayment penalties that 2/3 mortgage holders will trigger.

Doesn’t seem like we’re getting the right advice from the right professionals now does it.

We’ve seen about 2/3 of our clients break their mortgages and trigger penalties – almost every single one of them a small and relatively painless penalty thanks to staying in a variable mortgage.

But what about these rising rates?

If you are currently in a Prime -.65% to Prime -1.00% variable, then to lock-in would be to inflict an immediate rate hike on yourself that might take the government another 12-18 months to pull off… if they even do.

Stay variable.

If you are in a Prime -.35 or shallower mortgage, we should discuss restructuring that into a Prime -1.00% mortgage and reducing your rate by .65% or more.

Staying variable.

Our crystal ball says… yes, perhaps another two or three 0.25% hikes through 2019, but at that point the odds favour (heavily) an economic contraction that will, in turn, trigger a corresponding reduction in interest rates.

It is our theory that the federal government is pushing rates up aggressively to beat said economic contraction, because they want to have the tool of ‘reducing interest rates’ back in their toolbox when the rainy days come..and we are overdue for stormy economic times. So when those times arrive, it wouldn’t be prudent if you have already locked-in.

In short, life is variable – your mortgage should be as well! 

If you have any questions, contact me to discuss your variable mortgage options!

(519) 642 9372

amandaoppedisano@dominionlending.ca

Best,