Deciding between a fixed- or variable-rate mortgage has always been a challenging choice for borrowers looking to buy a home or renew a loan, but with interest rates sitting at levels not seen in decades, the stakes are especially high.
Variable-rate mortgages fell out of favour as Bank of Canada interest rate hikes sent the cost of loans linked to the big banks' prime rates soaring, but the cost of fixed-rate mortgages have also climbed from their pandemic lows.
Frank Napolitano, co-founder and mortgage agent at Mortgage Brokers Ottawa, said he's still seeing some borrowers opt for a variable rate, even noting that a recent client who was struggling with a variable-rate mortgage chose to stick with it after consolidating some other debt and extending the amortization period.
"He's decided he's going to go variable only because he believes that the rates are now probably at the peak and the payment that's been set up for him at 25 years is something that he's very comfortable with," Napolitano said.
"He's hoping that with so many people struggling that the interest rates are going to come down and then he will consider locking it in, but he wants rates to come down a little bit before (then)."
Napolitano adds that variable rate mortgages generally have less onerous penalties than fixed-rate options if you have to get out of your loan early
Until recently, the cost of new variable-rate mortgages was typically a little bit lower than fixed offerings.
Now, many of the rates offered for five-year variable-rate mortgages posted on rate-comparison website Ratehub.ca are higher than the five-year fixed-rate options. That means, banks will have to cut their prime rates for a variable-rate borrower to save money over a five-year term.
This makes future interest rate changes by Canada's central bank a key focal point for those deciding between a variable- or fixed-rate mortgage.
In its latest interest rate announcement, the Bank of Canada kept its key rate steady at five per cent -- but the central bank made it clear it is prepared to raise rates again to bring inflation down to its two per cent target.
For variable-rate borrowers, that means they need to prepare for the possibility that rates could rise before they move lower. Depending on the terms of the loan, that may mean higher monthly payments or extending the amortization period of the loan if rates go up.
Variable-rate mortgages can be converted to a fixed-rate loan without penalty, but you are typically locked in at the lender's posted rate. If you want to negotiate the fixed rate with your lender or move to a different lender, there will be a penalty.
A fixed-rate option offers stability with monthly payments, but rates today are sitting at their highest level in recent memory. As interest rates rose over the last 18 months, fixed-rate borrowers benefited from being locked in.
But if they lock in again now, at a higher rate that later falls, those borrowers would be stuck with the current rate for the term of their loan unless they choose the pay the penalty to break their mortgage.
Allison Van Rooijen, vice-president, consumer credit, at Meridian Credit Union, recommends potential buyers and borrowers coming up for renewal start by looking at their budget.
"My best advice is to start by just jotting down your real life expenses ... everything you actually spend in a month and then use an online calculator and figure out what type of mortgage payment you could be facing," she said.
"And do that well in advance of your renewal so that when you do talk to your financial services professional, you're going in eyes open."
Van Rooijen said it is a very different rate environment now than a couple of years ago.
"We have seen a real shift back to fixed-rate mortgages as Canadians are looking for monthly stability and some peace of mind," she said.
But she adds that many clients are opting to lock in a rate for terms shorter than the traditional five-year option, as they take a wait-and-see approach to where interest rates are headed in hopes rates might come down in the next few years.
Whatever a borrower decides, Van Rooijen said it is important to have the right loan for the situation.
"Every borrower has a different scenario based on where they are in their life, their home and their goals," Van Rooijen said.
"And so if you work with a financial professional, whether it's a credit union, a bank, a mortgage broker, seek out personalized advice because every situation is so different."
Canada will sharply lower the number of immigrants it allows into the country for the first time in years, marking a notable shift in policy for the government as it tries to remain in power.
The president and CEO of New Brunswick-based Covered Bridge Potato Chips is taking an 'extended leave of absence' after being charged with domestic violence this past weekend.
Prime Minister Justin Trudeau says the Liberal party is 'strong and united,' despite efforts from within his caucus to oust him as leader.
A memorial is growing outside a Walmart in Halifax after a 19-year-old employee was found dead inside an oven in the store Saturday night.
A search has started at Prairie Green Landfill for the remains of two victims of a serial killer.
The Bank of Canada made a sizable cut to its key lending rate Wednesday from 4.25 per cent to 3.75 per cent as the global economy continues to expand. The half percentage point cut is the fourth rate cut in a row by the central bank as inflation dropped from 2.7 per cent in June to 1.6 per cent in September.
He is a familiar face to residents of a neighbourhood just west of Roncesvalles Avenue.
McDonald鈥檚 worked Wednesday to reassure customers that its U.S. restaurants are safe as federal investigators tried to pinpoint the cause of a deadly E. coli outbreak linked to the fast-food giant's Quarter Pounder hamburgers.
Turkiye鈥檚 air force struck Kurdish militant targets in Iraq and Syria on Wednesday in apparent retaliation for an attack at a key state-run defence company that killed five people and wounded more than a dozen others.
Vancouver Fire Rescue Services received its first shipment of new firefighting gear on Wednesday, advancing the department's plans to reduce cancer risk for its members.
A Real Canadian Superstore in B.C.'s Fraser Valley was evacuated Tuesday night due to a "suspicious" fire in the toilet paper aisle, according to authorities.
A man who fired at least 19 gunshots at an RCMP detachment in northern British Columbia, narrowly missing officers inside, has won a reduced prison sentence from the province's highest court, which ruled the sentencing judge failed to fully weigh the man's mental illness at the time.
He is a familiar face to residents of a neighbourhood just west of Roncesvalles Avenue.
Brampton is looking to the federal and provincial government to address the growing number of its vulnerable international students being exploited and trafficked.
The Bank of Canada made a sizable cut to its key lending rate Wednesday from 4.25 per cent to 3.75 per cent as the global economy continues to expand. The half percentage point cut is the fourth rate cut in a row by the central bank as inflation dropped from 2.7 per cent in June to 1.6 per cent in September.
Speed was a possible factor in a Tuesday night rollover involving a semi-truck that left 17 cows dead. In a news release Wednesday, Calgary police said officers were called to the area of Stoney Trail S.E. and Macleod Trail S.E. around 8:10 p.m. for a reported rollover involving a semi-truck carrying 95 cattle.
A Calgary Jewish organization issued a response Wednesday to anti-Israel graffiti spray painted on a series of road dividers near the Wilder Institute/Calgary Zoo.
A new report suggests that Canadians' exposure to a radioactive gas is increasing, putting millions of people at a higher risk of developing lung cancer.
One person has died and others have been injured after a two-vehicle collision involving a tractor trailer and a car on Highway 7 in eastern Ontario, according to police.
Homeowners with a variable rate mortgage in Ottawa can expect to see some savings thanks to a significant rate cut by the Bank of Canada.
A Zamboni driver in western Quebec has been arrested on suspicion of impaired driving after a low-speed crash at a hockey rink on Monday.
Nigel Berkley and CRARR plan to file complaints with the police ethics commissioner and the human rights commission after Berkley was repeatedly stopped while driving his mother's car over four months.
Montreal Mayor Valerie Plante will not be seeking re-election.
Canada will sharply lower the number of immigrants it allows into the country for the first time in years, marking a notable shift in policy for the government as it tries to remain in power.
The Alberta Pharmacists' Association says upcoming government cuts to service compensation fees will have a big impact on pharmacists and also patient care.
An Edmonton tow truck operator has been charged after police say he refused to release a vehicle to its owner.
The Bank of Canada (BOC) announced a cut to the interest rate Wednesday and experts are expecting that will benefit Edmonton's housing market.
A memorial is growing outside a Walmart in Halifax after a 19-year-old employee was found dead inside an oven in the store Saturday night.
The president and CEO of New Brunswick-based Covered Bridge Potato Chips is taking an 'extended leave of absence' after being charged with domestic violence this past weekend.
A volunteer treasurer is facing charges after funds went missing from Nova Scotia Premier Tim Houston鈥檚 riding.
A search has started at Prairie Green Landfill for the remains of two victims of a serial killer.
A 59-year-old man has died following a crash involving three vehicles that started after a tire fell off a car on the Trans-Canada Highway Wednesday morning in the RM of Tache.
Police are asking for the public's help finding a 27-year-old inmate who was mistakenly released from custody in Manitoba.
Regina police says officers will provide an update Thursday in its search for the suspect of a homicide that took place in the city during the summer of 2023.
The Saskatchewan Roughriders along with other Canadian Football League [CFL] clubs have announced their player nominations for the 2024 league awards.
There are many issues top of mind for voters in the upcoming provincial election.
Detective Robert Hofstetter examined Erb鈥檚 home after her death and came to several conclusions based on the blood stains he found there.
A psychologist who recently assessed Geovanny Villalba-Aleman believes he may have experienced a psychotic break before stabbing three people in a gender studies class at a University of Waterloo.
Things could be looking up for Waterloo, Ont.-based company and former tech darling Sandvine, after being removed from the U.S. Department of Commerce Entity List earlier this week.
Canada's discount airline is suspending operations to and from Saskatoon.
With the war in Ukraine still going on and Saskatchewan now home to hundreds of newcomers fleeing the attacks, there鈥檚 been a resurgence of a youth group here in Saskatoon.
Saskatoon Public Library workers are in a strike position following the rejection of a tentative agreement with the employer.
A Sudbury jury has found Felicity Altiman guilty of second-degree murder in the December 2020 stabbing death of a Sudbury man.
It only took minutes for North Bay pharmacist Brian Chute to be out $1,500 after fraudsters deceptively swapped his bank card with another.
The president and CEO of New Brunswick-based Covered Bridge Potato Chips is taking an 'extended leave of absence' after being charged with domestic violence this past weekend.
A 27-year-old man is miraculously alive after his pickup went over Hawk Cliff near Port Stanley. Fire fighters estimate that from the top to bottom of the embankment is around 270 feet.
OPP have confirmed that a transport truck driver crashed into a historic home just southeast of London this morning.
On Oct. 18, London police were contacted by Toronto Police Service requesting help to find a Toronto man wanted for multiple robbery and firearms related offences.
A haunted house in the Town of Innisfil is causing a real scare for some people a week before Halloween.
Barrie police conducted a search on Wednesday of the last place Autumn Shaganash was seen in hopes of giving her family some answers to her mysterious disappearance.
A 34-year-old motorcyclist has died following a collision in Barrie鈥檚 south end on Tuesday.
Windsor Fire and Rescue Services has been working to prepare for heightened HAZMAT risk ahead of relaxed restrictions around the transportation of some hazardous materials across the Ambassador Bridge.
As hospitals elsewhere in Ontario reintroduce mask mandates due to rising respiratory illnesses, Windsor hospitals are taking a more measured approach.
Now that production is set to begin at Windsor鈥檚 battery plant, NextStar is looking for some employees to make that production happen.
A man who fired at least 19 gunshots at an RCMP detachment in northern British Columbia, narrowly missing officers inside, has won a reduced prison sentence from the province's highest court, which ruled the sentencing judge failed to fully weigh the man's mental illness at the time.
An oil salvage operation is underway on the fragile wreckage of a U.S. army transport ship that sank almost 80 years ago off coastal British Columbia in a race to head off an eruption of thousands of litres of oil that a coast guard official says is "near imminent."
Green Party Leader Sonia Furstenau says the starting place to supporting whichever party comes to power in British Columbia is her party's platform.
Dave Lindsey began growing giant pumpkins to bring a bit of magic to his grandkids' Halloween.
A U.S. District Court judge in Montana has sentenced a 27-year-old man from Kelowna, B.C., to 18 months in prison for using fake names to buy guns with the aim of selling them in Canada.
Nearly two years after a man was stabbed to death in downtown Kelowna, RCMP have made an arrest in the case.
As part of anniversary celebrations, the City of Lethbridge is inviting the community to see VisitLethbridge.com Arena like they never have before.
A design plan is now underway to increase the capacity of Lethbridge's Water Treatment Plant.
Following community feedback, times for WestJet flights between Medicine Hat and Calgary are changing.
The lack of 24-hour public washrooms has been a long-standing issue in the Sault, especially considering the rise in homelessness.
The union representing the fire rangers with the Ministry of Natural Resources says money won鈥檛 fix the systemic problems in the workplace.
Rallies by a group called Voices Against Violence took place across the country on Monday, including Sault Ste. Marie.
Investigators found the remains of a 77-year-old American man on Wednesday at the scene of a fire that destroyed a hotel in western Newfoundland earlier on the weekend.
Police in western Newfoundland say a 77-year-old man visiting the province from Kansas is missing after a fire at a hotel in Deer Lake, N.L.
At 2 p.m. on Thursday, the scene at the Lions Club in Clarenville, N.L., rivalled any rowdy St. John's bar that thumps with music late on a weekend night.
He is a familiar face to residents of a neighbourhood just west of Roncesvalles Avenue.
A meteor lit up our region's sky last night 鈥 with a large fireball shooting across the horizon over Lake Erie at around 7:00 p.m.
Residents of Ottawa's Rideauview neighbourhood say an aggressive wild turkey has become a problem.
A man who lost his life while trying to rescue people from floodwaters, and a 13-year-old boy who saved his family from a dog attack, are among the Nova Scotians who received a medal for bravery Tuesday.
A newly minted Winnipegger is hoping a world record attempt will help bring awareness for the need for more pump track facilities in the city.
A Springfield, Ont. man is being hailed a 'hero' after running into his burning home to save his two infant children.
Hortense Anglin was the oldest graduate to make her way across the platform at York University's Fall Convocation ceremony this week. At the age of 87, she graduated with an Honours degree in Religious Studies.
Looking for a scare with good intentions this Halloween season? The ghosts and ghouls of Eganville, Ont. invite families to tour the Haunted Walk at Lekbor Manor.
The image of a sleepy Saskatchewan small town with 'not a lot going on' is a well-known anecdote. However, one Saskatchewan company is hoping to change that 鈥 and allow communities both on and off the beaten path to share their stories and advertise what they have to offer.
Canada will sharply lower the number of immigrants it allows into the country for the first time in years, marking a notable shift in policy for the government as it tries to remain in power.
Prime Minister Justin Trudeau says the Liberal party is 'strong and united,' despite efforts from within his caucus to oust him as leader.
A debate has ground work in the House of Commons to a halt for weeks, but a new poll suggests that most Canadians are not even aware it's happening.
McDonald鈥檚 worked Wednesday to reassure customers that its U.S. restaurants are safe as federal investigators tried to pinpoint the cause of a deadly E. coli outbreak linked to the fast-food giant's Quarter Pounder hamburgers.
A quick shake of the head after a hard hit could signal that a person has a concussion, a new study suggests, based on the experiences of young athletes.
A recall has been issued for certain clothing items sold at Giant Tiger stores over high levels of lead, according to a notice published by Health Canada Tuesday.
Officials in Hong Kong said Wednesday they have discovered dinosaur fossils in the city for the first time on a remote, uninhabited island that's part of a geopark.
A meteor lit up our region's sky last night 鈥 with a large fireball shooting across the horizon over Lake Erie at around 7:00 p.m.
The estimated population of North Atlantic right whales increased in 2023, but a group of international marine scientists say human behaviour still poses a significant threat to the critically endangered species.
Almost three years after the deadly Astroworld Festival tragedy, Houston rapper and concert headliner Travis Scott just settled hundreds of lawsuits related to the case.
American singer-songwriter Matthew Sweet suffered a stroke while on tour in Toronto earlier this month, and a GoFundMe campaign has been launched to raise money to cover the 'overwhelming' health-care costs.
Martha Stewart may be hot in the kitchen, but she鈥檚 not looking to replicate that on a dating reality show.
Starbucks Corp suspended its forecast through the next fiscal year as new CEO Brian Niccol looks to turn around the coffee giant struggling with falling demand for its pricey drinks.
The Bank of Canada made a sizable cut to its key lending rate Wednesday from 4.25 per cent to 3.75 per cent as the global economy continues to expand. The half percentage point cut is the fourth rate cut in a row by the central bank as inflation dropped from 2.7 per cent in June to 1.6 per cent in September.
Air Transat says it is laying off as many as 400 flight attendants, but plans to bring them back to work at some point.
Grab your passport and your sunscreen, Lonely Planet has just revealed its 30 must-visit destinations for 2025 as well as a brand-new rundown of top 10 travel trends.
The Radium Hot Springs in British Columbia's Kootenay National Park has undergone a $29-million makeover.
When curators at the National Toy Hall of Fame learned last fall that the Fisher-Price Corn Popper had been voted in as part of the class of 2023, they knew they had some serious work to do.
An 18-year-old has filed a lawsuit over the ownership of the ball Shohei Ohtani made baseball history with when he became the inaugural member of the 50-50 club.
Scottie Barnes and the Toronto Raptors kick off the new NBA season tonight as they host the Cleveland Cavaliers.
Former 'Malcolm in the Middle' star Frankie Muniz is set to continue his NASCAR career with a full-time ride in the Truck Series for 2025.
An increased risk of fire has prompted the recall of thousands of Honda hybrid vehicles in Canada.
A senior executive for Volkswagen in China has been deported for allegedly using cocaine and marijuana while on vacation in Thailand, according to Chinese authorities and German media reports.
The U.S. government's road safety agency is investigating Tesla's 'Full Self-Driving' system after getting reports of crashes in low-visibility conditions, including one that killed a pedestrian.
The Shopping Trends team is independent of the journalists at 愛污传媒. We may earn a commission when you use our links to shop.聽Read about us.
