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Mortgage Broker News | 10 Feb 2017, 08:15 AM Agree 0
While cheaper, variable-rate products are fundamentally more volatile, especially in the current economic climate
  • Aaron Phinney | 10 Feb 2017, 09:20 AM Agree 0
    Given that Prime rate held steady from October 2010 to November 2014 at 3% (the longest period of steady Prime rate without a change since the 1950's), I wonder what decade he is referencing when he states that variable rates “[move] up and down constantly with market interest rates, changing interest payments.”
    While I agree that there has to be a risk analysis to determine affordability when undertaking a variable rate, I disagree that it is “the worst possible time to get a variable-rate mortgage.”

    Reads like a fear editorial to me.
  • Welbanks | 10 Feb 2017, 09:55 AM Agree 0
    I'm in full agreement with this article. Now with the stress test to qualify all high ratio mortgages, it puts VRM back on the table as an option for those that wouldn't have normally taken it under the old rules, because they couldn't afford it, or preferred the more sure bet of a fixed rate qualified at a lower contract rate.

    I can appreciate the need for a stress test, but this latest change will only make the issue worse because it's putting a riskier mortgage back in the hands of those looking for low payments, and not necessarily looking at the long term potential for rate increases squeezing their budgets.

    I swear that the people that make these decisions really have no clue sometimes and can't see the bigger picture because they aren't usually mortgage professionals. It sounds good on paper, but when you think it through, it makes matters worse.

    I hope this policy blows up in the face of the Liberals, along with all this other nonsense related to portfolio insurance. Never seen policies so out of step with reality as we've seen under Trudeau. Ugh.
  • Mike Maguire | 10 Feb 2017, 10:06 AM Agree 0
    Everyone talks about the risks of variable rates but nobody discusses the risks of fixed rates. Fixed rates can cause huge penalties at times that would have been avoided by variable rates. Then there is the math of it. The lower your rate at the beginning of your mortgage the faster you pay it down. Plus the opportunity cost. The extra you are paying on a fixed rate could be going to something more useful. Paying debt down, saving or paying the mortgage down faster. History over the last 30 years has showing that short term and variable rates have a huge advantage over fixed. I have been a big fan of variable rates ever since i locked in at 11.5% in the 80's and then rates tumbled to single digit.
  • Marie | 14 Mar 2017, 11:11 AM Agree 0
    Ridiculous article, not sure what decade this guy is living in. BOC rate has been low for years with very little change. I have thousands of clients in variable rate mortgages and they have been nothing but winners for years. I dont believe people take a variable rate for lower payments as most of my clients use it as a strategy. They set their payments at what the 5 yr fixed payment would be and automatically they are winning with paying down the principal. After 30 yrs in the business I have seen too many people hurt by penalties and not being able to port that makes sense. The variable is a viable option that works for a lot of people.
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