Choosing between a fixed and variable mortgage rate depends on several factors, including your financial needs and risk tolerance. In an uncertain economic context, it is essential to understand the advantages and disadvantages of each option.

Variable Rate: Benefit from Rate Decreases

A variable rate can save you money when interest rates decrease. Several economists predict that the Bank of Canada may lower its key interest rate in the coming weeks, making the variable rate more attractive for those renewing their mortgage soon. However, if rates decrease more slowly than expected, a short-term fixed rate could be more advantageous.

Currently, a three-year fixed rate is recommended as it is often lower than the variable rate for the same period. For a variable rate to become more advantageous than this fixed rate, the central bank would need to lower its key rate significantly.

Short-Term Fixed Rate: Security in Uncertain Times

In an uncertain economic period, a short-term fixed rate, such as three years, can offer increased security. You will know exactly how much you will pay each month, which can be reassuring if interest rates do not decrease as much as expected.

Extending the Amortization Period

If your monthly payments are too high, you can consider extending the amortization period of your mortgage. Extending from 25 to 30 years can reduce your monthly payments, but it will increase the total amount of interest you pay over the life of the loan.

Mortgage Portability

With more frequent moves, the portability of your mortgage is a crucial aspect. Check if your bank allows you to transfer your current mortgage rate to a new property. This can be particularly advantageous if you have a low rate.

Conclusion: A Matter of Needs and Risk

The choice between a fixed and variable rate depends on your specific needs and risk tolerance. If you plan to move soon, a short-term fixed rate may be preferable. If you are comfortable with variable payments and anticipate a rate decrease, a variable rate may be a good option.

In any case, it is essential to choose a solution that fits your financial situation and future plans.