5Y Fix vs variable rate vs predictions

[SuperBobby]

Hi,

I just secured a 2.75% (Prime -1.20) 5YR variable rate. The trust cie also offered a 3.14% 5YR fixed rate as a promotion. I am waving and I know I am not the only one, it is typical.

Looks like many financial specialists agree there are still a few hikes coming for the next 2 years. In that case, fixed rate is a clear winner. But the mortgage penalty (IRD) on a fixed rate is strongly affected by future fixed rate and could cost me a lot.

Except for penalty and predictions, anything that could help me on this decision?

Tks

Edit: 3.34, not 3.14%

[suezuki650]

The biggest question in my mind would be how big is your mortgage and how well could you weather an increase?

In the beginning of my mortgage buying days I was going fixed because I didn't have a lot of wiggle room and wanted to know what my payments would be. During the last round they offered me such a fabulous rate, that I knew the rates couldn't stay that low, so again went fixed.

The next time it will be a relatively small mortgage, so I might go variable. Historically you can get a better deal with variable rates, if you can weather the potential increases.

[SuperBobby]

Originally Posted by suezuki650

The biggest question in my mind would be how big is your mortgage and how well could you weather an increase?

In the beginning of my mortgage buying days I was going fixed because I didn't have a lot of wiggle room and wanted to know what my payments would be. During the last round they offered me such a fabulous rate, that I knew the rates couldn't stay that low, so again went fixed.

The next time it will be a relatively small mortgage, so I might go variable. Historically you can get a better deal with variable rates, if you can weather the potential increases.

HMB? Hi neighbor

With variable I could weather well an increase. That might not be a winner this term but it is always a winner long term.

I would not wave and go with a fixed rate if it was not for the crazy penalty (IRD), specially if I decide to terminate the agreement in the middle of the term. Nobody mean to do that but things happen in life.

But yeah, if it was for a small mortgage, variable is an easy one.

[suezuki650]

Originally Posted by SuperBobby

HMB? Hi neighbor

I would not wave and go with a fixed rate if it was not for the crazy penalty (IRD), specially if I decide to terminate the agreement in the middle of the term. Nobody mean to do that but things happen in life.

There are usually the same penalties to break a variable rate mortgage as a fixed rate, especially if it's for a specified term.

Yup, I'm in HMB. Love the area, even more so when they fix Greenbank.