"Those who have been in the business for some time know that, traditionally, variable rates are set for a term of 5 years. Recently, a few lenders have ventured to offer variable mortgages based on a 3-year term. As of this week, one of the smaller players even introduced a variable rate mortgage for a 1-year term."
"What is the big deal about a 1-year variable rate?"
"Firstly, as of now, it is set below Prime, so you can get a 1-year mortgage at 2.10%."
"Secondly—it gives you time to see how the rates are going to move over that one year period and then decide to continue with variable or switch to fixed rate."
"And thirdly, there are some rumours within the mortgage community that pricing for variable rates may be better a year or so down the road. By better I mean that the discount to Prime may be even bigger. By taking a 1-year variable rate now, you would not lock into a longer term with the current available discount and miss better opportunities."
Best 5-year fixed term: 3.58% (some restrictions apply)
Best variable rate: Prime minus 0.30% (or 1.95% for a 5-year term)
With kind regards,
Vasko DeLev, AMP
Accredited Mortgage Professional
Verico Capital Mortgages Inc
Direct Line: 613-882-7603