Interest rates are rising. Is it time to switch to a fixed rate mortgage?

Interest rates are rising. Is it time to switch to a fixed rate mortgage?

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For the first time since 2018, the Bank of Canada has hiked the overnight interest rate to curb inflation and cool the real-estate market. With increasing interest rates many variable mortgage holders are considering switching to a fixed rate mortgage.

History has shown that central banks usually fall short of their rate hike goals. Variable rates offer more flexibility and lower penalties than fixed rate mortgages. Many borrowers end up breaking their term if they need to re-finance or sell.

The penalty for breaking a variable mortgage is typically three months of interest whereas a more punitive calculation is usually used with a fixed rate.

The main reason for switching to a fixed rate is if you experience anxiety every time the Bank of Canada makes an interest rate announcement. For a five-year fixed rate, 3.3 per cent is still historically low and below current levels of inflation, so if you prefer the peace of mind — the fixed option makes sense.

Sam Ansari

Website: http://samansari.com

Centum Financial Services L.P. | Sam Ansari About Us Centum Financial Services L.P. is one of Richmond Hill, , Ontario, ’s leading mortgage brokerage firms, offering seamless solutions to all your mortgage needs. Whether you want to buy a new home, set up a business or even refinance an existing loan or mortgage, we offer you the perfect solution to cater to your specific requirement. Customer Oriented Services At Centum Financial Services L.P., we put our customers first and strive to serve them better. Our ever-increasing clientele is a clear indication of our commitment and focus to serve them better. We help our customers pick the right mortgage solutions according to their need, and then personalize them to suit their individual requirements. Our aim is not only to provide the best service but also to establish a long-lasting relation with our customers. Highly Qualified and Experienced Mortgage Staff Our team at Centum Financial Services L.P. comprises of some of the most dynamic and experienced personnel from the mortgage industry, having a thorough knowledge of the Calgary, area. We will provide all the necessary advice and guidance that you might require for your mortgage application, interest rate negotiation, or any other related procedure. We constantly work towards offering you the best solution in the most cost-effective manner. Efficiency through Flexibility The mortgage industry is extremely dynamic and volatile. Rates may change drastically in a matter of hours. Centum Financial Services L.P. is quick to detect such changes and keeps its customers well informed and updated at all times. Our processes and systems are flexible and easily adapt to such fluctuations so that the customer is never at a loss. Industry Leading Products and Services We offer a wide array of products, tools and services that are designed specifically keeping the mortgage industry in mind. Our online tools and calculators take care of all the numbers and calculations involved, quickly and accurately. Centum Financial Services L.P.