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Should You Choose a Variable Rate in 2024

written by JoseD

We note that Canada’s inflation rate has decreased significantly, standing at 2.9% in January 2024, falling from a high of 8.1% in June 2022. Despite this drop in inflation, the Prime rate remains at 7.20%, the highest level in more than two decades.

Comparison Of Fixed Vs Variable Rates (25 Years)

Source, CMHC – Mortgage Lending Statistics

This context suggests that we could be approaching an inflection point in the Prime rate curve.
Adjustable Rate Mortgage (ARM): Currently offered to Prime – 0.95% for insured transactions, which is equivalent to 6.25%. 5 Year Fixed Rate: Available now at 4.99% and a 3 Year Fixed Rate: Available at 5.14% for the same type of transaction.

Hypothetically speaking, if the Prime rate gradually adjusts to 5.00% during this or the following year, you could benefit from an even lower interest rate of 4.05%.
Most of variable rates mortgages also offers the flexibility to convert to a fixed rate at any time before the renewal of the contracted term, without any penalty. This allows you to switch to a fixed mortgage if you prefer, adjusting the interest rate to the current moment for a term equal to or greater than the time remaining in your contract.
This is an opportune time to consider a Variable Rate Mortgage, given the current trend in rates and the flexibility options we offer.
I am available to discuss how we can tailor these options to your financial needs and help you make the best decision.

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