Bank of Canada Governor Mark Carney recently stated that the recession is over. Many experts quickly stepped up to temper his optimism with a little dose of reality. Yes, they said, the economy may have experienced marginal growth, marking an end to the technical recession, but there is still a long way to go.

Many cite increasing jobless rates as a sign that the economy is still struggling. Manufacturers are reporting large inventories and maintaining hiring freezes. Some manufacturers are also reporting that the value of their current orders has dropped since the beginning of the year.

Given this negative news, how should mortgage holders feel? Is the jobless rate going to lead to sell-offs or foreclosures? Will it be harder for borrowers to get the money they need?

In April of 2009, the Canadian Association of Accredited Mortgage Professionals (CAAMP) prepared a report about the state of the Canadian mortgage market. Entitled The Canadian Residential Mortgage Market During Challenging Times, the report actually has some good news for Canadian mortgage holders. While the authors concede that there could still be some challenges in Canada, the risks here are considerably lower than in the United States. Points raised in support of this statement include:

• In the U.S., troubles were triggered by large increases in mortgage rates. In Canada, rates have remained at historic lows. In fact, the report predicts that 75% of Canadian mortgage holders will find reduced rates at their next mortgage renewal. Even those whose rates increase will find the increases to be minor and manageable.

• The increasing unemployment rate in Canada is worrisome and contributes to the risk of mortgage troubles. The report found that among homeowners with mortgages where one or more primary earners have lost their job, 14% are concerned about being able to make their monthly mortgage payment. But, unlike in the U.S., most have amassed substantial equity in their homes which they can draw upon to help them in times of need.

• Panic selling has become a problem south of the border, but the report does not forecast the same trend occurring in Canada. Yes, homeowners who have lost employment could sell their homes to help them manage, but there is no evidence of the panic seen in parts of the U.S.

• Canadians tend to have much more home equity than Americans, which means they also have more options when it comes to managing with less income. Unlike the U.S., where negative equity (where the mortgage is more than the value of the home) is a problem, only about 2% of Canadian homeowners owe more on their mortgages than their home is worth.

• Canadian lenders and mortgage insurers are more willing to work with and assist troubled borrowers.

• Overall, the conditions that have caused the troubles in the U.S. do not exist in Canada. There may be some homeowners here who are at risk of losing their homes, but for the most part, Canadian homeowners are on much safer ground.

All in all, the outlook for Canadian mortgage holders is considerably brighter than for those below the 49th parallel. And for those who need some assistance, mortgage brokers can offer a range of affordable home equity products and debt consolidation strategies to help them weather the storm.

Toronto is Canada’s most celebrated city. With fantastic cultural attractions and plenty of interesting history and architecture, Toronto is a wonderful place to call home. If you are interested in buying a home in Toronto, this article will help ease the transition and inform your decision.

From 18th century British roots as a muddy colonial town, Toronto has burgeoned into North America’s fifth-largest city and a hot spot for films and festivals. Nearly 100 languages are spoken in its multicultural mosaic of neighborhoods. You can visit the espresso bars of Little Italy’s College Street, have mezes (Greek tapas) on Danforth Avenue or sniff the global trade winds of Kensington Market, which offers fare as varied as European cheeses and Caribbean seafood.

Like a counterweight to Francophone Montreal, Toronto is Canada’s de facto Anglophonic capital. Here you can take high tea at the Windsor Arms or sleep at the “King Eddy” hotel, where royalty once laid their heads. Walk down cobblestone streets lighted by gas lamps in the neighborhood of Old York and stop for gourmet noshes at the St. Lawrence Market. Ride a quaint streetcar east to the Distillery Historic District, where artisans, art galleries and coffeehouses jostle for space.

After dark, you can head back downtown to the city’s Entertainment District for evolving nightlife or to the Theatre Block, which boasts the world’s third-largest number of onstage productions, after New York and London. Elsewhere around the city, the music scene is vibrant. Sip a beer and listen to some tunes at the legendary Horseshoe Tavern, where Sting once played in his underwear, or the vintage blues-and-jazz dive at the Rex Hotel, both on Queen Street.

Try to time your visit to catch one of Toronto’s major festivals: indie music at North by Northeast and Pride Week celebrations in June, the Caribbean carnival of Caribana in mid-July or the Toronto International Film Festival in September. This year’s film fest, in “Hollywood North,” starts Thursday and runs through the 17th. But don’t forget to escape the city while you’re here. The awesome natural spectacle of Niagara Falls is just a two-hour drive that passes tempting detours onto the back roads of the Niagara Peninsula’s wine country, where you can taste sweet ice wine made from frozen grapes.

Le Royal Meridien King Edward is a historic showpiece, with doubles from $165; (800) 543-4300, www.lemeridien-kingedward.com. A fresh boutique hotel, SoHo Metropolitan boasts the epicurean Senses bakery and restaurant downstairs. Rooms from $300; (866) 764-6638, www.metropolitan.com/soho. Toronto’s residential blocks burst with B&Bs. Doubles start at $50; www.bbcanada.com. Hipsters and artistic types crash at the Drake Hotel in Queen West Village. Doubles from $132; (416) 531-5042, www.thedrakehotel.ca.

So there you have it. A nice city in which to buy a home. Slightly north of the States.

Everything is looking good, you’ve got your new home, thanks to that mortgage loan, life could not be better, till the rising interest rates start getting to you. However all is not lost, you don’t have to bear the brunt of it, there are options that could help you out. One such option is, refinancing your mortgage, which means you use your existing property for a new mortgage to pay off the existing one. To pay off your high interest bills, mortgage refinancing is one of the best options that you, if you don’t mind making a single payment each month, due to combing both the old and the new mortgage.

The primary reason why most people desire refinancing is the low mortgage interest rates and lower monthly payments. In this scenario, you can lower your monthly payments only if you don’t go in for a higher mortgage principal amount. Building equity faster on your property is another reason why refinancing is preferred. This is feasible only for those who can afford to a higher monthly mortgage payment. Some part of this goes toward the interest and the remaining is applied to the principal. You could even change the type of the mortgage loan by refinancing.

Refinancing may not be your best bet if you are planning to sell off your house in the near future. If you are going to stay in the house for many years to come, see if it is worth paying a refinancing fee to avail the lower interest rates. There are “refinancing calculators” online which help you in evaluating the savings that you could make by taking another loan i.e. refinancing.

You need to speak with your mortgage lender about the prerequisites for refinancing. Some information that most mortgage banks would consider include your current monthly payment, insurance statements, status of property tax and outstanding mortgage balance among others. The new lender would also need information about debts and assets, an appraisal, site survey and verification of employment and debts. Refinancing almost always involves an additional charge as the loan taken is considered to be as good as new. However, check with your mortgage broker if there are banks that offer refinancing with little or no “processing charges”. In this case, you you may have to pay a higher rate of interest.

There are many people who are enjoying the benefits of refinancing. They are paying lower monthly benefits thanks to the low mortgage rates. For an ARM mortgage borrower, it maybe better to opt for refinancing and change to a fixed rate loan, according to real estate experts in Canada. Lower monthly payments will definitely reduce your monthly expenses. You could benefit from the flexible terms and amortization periods. The fixed stable installments definitely bring you peace of mind. Under refinancing, you could borrow up to 100% of the loan (OAC) and you also know the exact terms of your mortgage loan. However, you need to see if this scheme would be suitable for you, after understanding the risks involved. Speak with a few mortgage loan officer and shop for the best rate and package. Get the best deal possible and with the way the real estate market is spiraling downwards, refinancing could be considered, say mortgage lenders in Canada.

Home owners face a perennial refinancing decision each time the term on their existing home mortgage expires. Do you renew your mortgage with your existing bank or lender, or should you shop around to see if better rates and terms are available from another lender?

Most banks and institutional lenders will offer their existing borrowers competitive interest rates when it comes time to renew a mortgage – particularly if the borrower does a little leg work and finds out the competitive rates from other lenders. Mortgage renewal is a no-brainer for a bank’s loan officer, who is often able to shave a half-point of interest off posted rates or match the offers of competitors who are trying to entice an existing borrower to take his or her business down the street. Difficulties can arise, however, when there has been a material change in the borrower’s circumstances.

The two instances in which borrowers are most apt to run into difficulties securing refinancing from their existing lender are when (a) their employment profile or income stream has changed, and (b) when the price of their home house prices has decreased in value. While the Canadian housing market has stabilized and house prices have maintained their value and continue to grow, albeit at a more moderate rate, there are some local markets where housing prices have dropped. Moreover, there has been a general tightening in Canadian lending practices as credit markets have tightened globally due to turmoil in the U.S. mortgage and housing markets. As a result, some Canadians who have less than optimal credit scores, who have been affected by job losses and/or who have seen the value of their homes drop are reportedly facing greater than normal difficulties in obtaining refinancing for their existing mortgages.

Borrowers from banks and other federally regulated lenders are required to purchase mortgage insurance for high-ratio mortgages where the value of the mortgage exceeds 80% of the value of the mortgaged property. As a result, some homeowners who have seen the market value of their property drop below the high-ratio mortgage threshold may be required to obtain mortgage insurance from the Canadian Home Mortgage Corporation, or one of the private federally recognized mortgage insurance companies. Obtaining mortgage insurance can prove difficult in such circumstances for individuals with a bad credit history and poor credit scores.

”People with a shaky credit rating, who relied on so-called ‘B’ lenders for a mortgage, could be left scrambling to find a new lender if their mortgage is coming due soon,” according to Chatham, Ontario’s Daily News. Homeowners in some Ontario cities affected by manufacturing job losses and falling housing prices have reportedly fallen into the gap created when they go to refinance with federally regulated lenders who now require mortgage insurance, but mortgage insurance is not commercially available based on their financial circumstances and/or past credit history.

Home owners experiencing difficulties in obtaining refinancing, as well as savvy consumers looking to find the best rates and terms available from competitive lenders are increasingly using the services of mortgage brokers when it comes time to refinance. People with poor credit finding themselves unable to renew their mortgage is “happening quite frequently now,” reports a local Chatham, Ontario mortgage broker, noting that the “market is very, very shallow right now” for people looking to refinance with poor credit.

Rather than relying on loan specialists at their local bank to obtain refinancing, home owners – particularly individuals with marginal credit scores and credit difficulties – are turning to mortgage brokers who offer a much, much wider of mortgage products from a broader spectrum of publicly regulated and private lenders. Most often Canadian mortgage brokers are able to find a refinancing solution that banks cannot offer, and are often able to offer homeowners better terms and rates for refinancing than are available from the bank that holds their current mortgage.

Everybody is aware that the Canadian mortgages became increasingly complex as we advance in the 21st century. Everything is different, from the product to the new technologies developed on the market. But the Banks of Canada keep their position unchanged, being the most important decisional factor when it comes to the mortgage system.

Variable Rate Mortgage In Canada

The Variable-Rate Mortgage is offered at the prime rate less 0.25%, so you benefit from a discount. It is also adjusted monthly. You can choose the fixed payment system or the variable payment. The difference between them is that the fixed payment is based on the rate for the minimum 5-year term in effect when the loan is opened, while the variable payment is adjusted monthly in relation to interest rate movements.

Fixed Rate Mortgage In Canada

With this conventional mortgage type you can use to finance up to 75% of the value of the mortgaged property. Due to the high flexibility of the system, you are free to choose different amortization periods and terms.

Capped Rate Mortgage In Canada

This system offers you a lower and short-term rate combined with long-term security. Although the applicable interest rate is somehow variable and adjusted in every month according to the prime rates, if rates are up at the time of the next adjustment, so you will never pay more than your initial capped rate. The maximal rate is determined according to the 5-year term established, so you always benefit from the best rate: the prime rate or the capped rate. You can choose from the fixed and variable payment, as mentioned above.

Money Saver Mortgage In Canada

These mortgages are being used especially when the priority has been given to the lower rate mortgages. To be more exact, let’s assume that a 5-year term loan has been assigned, with a variable interest rate based on the 3-month term rate reduced of 0,35 %. In this case, the mortgage rates and payments will be adjusted every three months according to the fluctuations of the rate in effect.

The responsible factor for the housing industry in Canada is the Canada Mortgage and Housing Corporation (CMHC). This Government agency ensures low cost mortgages for Canadians and insurances for the house lenders, as a safety measure. A proof that this corporation know what it’s doing are the statistics: since 1954, one in three Canadians asked for its help.

If you are a Canadian buying your first home, it is hardly surprising if you feel overwhelmed by the bombardment of daily news and advice that seems to impact on your home purchasing decisions. If it is not more dire news coming out of the United States about their ongoing housing crises, it seems to be confusing and conflicting speculation about the state of our housing and real estate markets. Now, add into this daily news mix analyst and industry uncertainty about where mortgage rates are headed and it seems enough to keep any levelheaded first-time homebuyer on the sidelines. But it doesn’t need to.

On June 10th, the head of Canada’s central bank, Bank of Canada Governor, Mark Carney, went against what were widespread predictions by financial analysts that he would drop the Bank of Canada’s main rate from its then (and now) current 3.0% in an effort to stimulate Canada’s economy. Instead, Mr. Carney elected to leave the BofC’s main rate at its current low level out of an abundance of caution that rising energy and commodity prices could herald a surge in consumer inflation. Mr. Carney, the U.S. Federal Reserve Chairman, Ben Bernanke, and other central bankers from the G7 group of the West’s leading economies had been talking for weeks about the portential for renewed inflationary pressure resulting from the surge in oil, natural gas and commodities prices.

In his most recent address, to Calgary’s Haskayne Schol of Business, on June 19th, Mr. Carney made it clear that – like all central bankers, it seems – that monitoring and curbing inflation is his primary focus. “At a fundamental level,” Mr. Carney declared, “the primary goal of monetary policy should be to keep inflation low, stable, and predictable.” Noting that “commodity-price shocks,” like the recent spikes in energy and food prices Canadians have experienced raise what he called “complex issues,” Mr. Carney nevertheless stressed that “a relentless focus on inflation clarifies policy decisions, makes communications easier, and maximizes the likelihood that expectations will remain well anchored.” He touted the benefits of keeping to what he called a “credible inflation target” in order to keep the cost of borrowing down and to allow individuals and firms to make better investment decisions.

The Bank of Canada press release accompanying Governor Carney’s most recent public address noted that, “The best contribution that the Bank of Canada can make to help all Canadians reap the benefits of the current commodities boom is to remain focused on achieving its inflation target.” As core inflation is running at or near the top of the Bank of Canada’s forecast for 2008, it seems reasonable to presume that there will be no further rate cuts when the Bank of Canada reconvenes to assess its main lending rate on July 15th. More likely, given that we are at the peak of the traditional summer “driving season” and, as yet, there appears to be little relief in gas prices, the inflation-conscious Bank of Canada Governor may call for a moderate boost to Canada’s main lending rate, likely a 0.25% increase to 3.25%. Canadian banks and other lending institutions appear to be factoring in the likelihood of such a rate increase into their fixed-term mortgage pricing.

If you are buying your first home, the indications from Canada’s central banker are that mortgage rates have bottomed out for now. In the short term, mortgage rates are likely to rise. Consulting an experienced and well-resourced Canadian mortgage broker who can provide advice for first-time homebuyers on the wealth of mortgage types and features that are currently available should be a first step for tentative first time purchasers. Canadian mortgages still remain at near historically low levels, consulting with a professional who can comparison shop the fixed rate and variable-rate mortgages available for first time home purchasers should help flesh out a mortgage market that is still somewhat in flux as the central bank shifts its emphasis away from providing economic stimulus to the Canadian economy and towards keeping an ever-watchful eye on the potential for rising inflation.

 

Ask any Canadian who has gone through the home buying process what score is more important – last night’s NHL results or their Beacon Score – and they’ll most likely respond, “the Beacon Score of course!”. The reason being that a Beacon Score is one of the credit scores that lender’s use to measure a borrowers’ risk based on a valuation of their financial history including details on credit cards, charge cards, loans, mortgages and overall payment history.

 

 

 

In Canada, 3 private company’s generate almost all the credit scores – Equifax, Trans Union and Experian. Though all 3 bureaus offer FICO (Fair Isaac Credit Organization) scores using the formula developed by Fair and Isaac, each has its own brand name – Equifax calls it the Beacon Credit Score, Trans Union has the FICO score and Experian uses the Fair, Isaac Risk Model.

 

 

 

A high credit score is an important factor in applying and securing the mortgage and mortgage rate of your choice. It also makes it easier for an individual to get credit cards and loans on favorable terms, sometimes even with instant approvals. The higher your score, the lower the interest rate! The difference between a good and bad score can increase the cost of a loan by 3% or more.

 

 

 

Equifax is the most popular credit score used by lenders and results range from 300 to 900. The break-up is as follows:

 

 

 

35% of the total score is based on payment history

 

 

30% is the amount owed and the available credit

 

 

15% is for length of credit history

 

 

10% is for types of credit used

 

 

10% is for search and acquisition of new credit and inquiries

 

 

 

A common misperception is that all inquiries will negatively impact your score instantly. The reality is that this may happen but its not a given and depends on your overall credit profile. The first inquiry can result in a drop of 5 to 20 points on the first mortgage inquiry, and will usually have a larger impact on the score for consumers with limited credit history and on consumers with previous late payments, but it’s different in every case.

 

 

 

Factors that affect your credit score

 

1. You have a short credit history

 

 

Age of your credit on revolving or non-revolving accounts also affects your credit score. Revolving accounts are credit cards such as Visa, MasterCard, or retail store card that allow you to make a minimum monthly payment and “revolve” the remainder of their balance over to the next month.

Non-revolving accounts include cards such as American Express and Diners Club and must be paid off in full each month.

 

 

 

Research shows that consumers with longer credit histories have better repayment risk than those with shorter credit histories. Also, consumers who frequently open new accounts have greater repayment risk than those who do not.

 

 

 

If you can maintain low balances and make sure your payments are on time, your score should improve as your revolving credit history ages.

 

 

2. You’ve been looking for credit in the past year

 

 

If you’ve been recently been seeking credit, this is evident on your credit file based on the number of inquiries in the past 12 months. Research shows that consumers who are seeking new credit accounts are riskier than consumers who are not seeking credit.

 

 

 

There are both credit and non-credit inquiries on the report and the score only considers those related to credit applications. Inquiries such as your bank reviewing your account or you requesting a copy of your own report are not considered.

 

 

 

The scores can identify “rate shopping” so that one credit search leading to multiple inquiries being reported is usually only counted as a single inquiry. For most consumers, a few inquiries on your credit file has a limited impact on FICO scores and the best advice is to only apply for credit when you need it.

 

 

3. Not paying off your loans

 

If you have installment loans and owe money on them, this does not mean you are a high-risk borrower. Paying down these installment loans is very positive as it shows that you are willing and able to manage and repay debt, and a successful repayment history is good for your credit rating.

 

 

 

One measurement is to compare outstanding loan balances against the original loan amounts. If you took out a $1,000 line of credit 1 year ago and still owe $925, this shows that you may be having trouble paying off the debt. Generally, the closer the loans are to being fully paid off, the better the score. This metric has limited influence on the FICO score.

 

 

 

Paying off loans on a timely basis reflects well on your credit score, but if you really want to improve it, try to pay the loans, (especially non-mortgage debt) as quickly possible.

 

 

4. Non-mortgage debt is too high

 

Consumers with larger credit amounts have a greater future repayment risk than those who owe less, resulting in the score measuring how much non-mortgage related debt you have.

 

 

 

The total outstanding balance on your last credit card statement is generally the amount that will show in your credit bureau report. Even if you pay these off in full each month, your credit bureau report may show the last billing statement balance.

 

 

 

Paying off your debts and maintaining low balances will help to improve your credit score. Consolidating or moving your debt into one account will usually not, however, raise your score, since the same amount is still owed.

 

 

 

Bankruptcy on the credit report is a borrower’s worst nightmare, as it stays on record for almost 10 years and reduces your score by 200 points or more.

 

 

Top tips to improve your credit score

 

1. Review your credit report at least once a year

2. Contact your creditors or the credit reporting agency to have errors on your credit profile corrected

3. Apply for credit only when you need it

4. Keep balances below 50% on your credit cards

5. Pay off non-mortgage debt on time as quickly as possible

 

 

 

When you’re looking for Canadian mortgage rates, it may seem like more than you can handle. Don’t stress. Take a deep breath and follow these simple steps to get your dream home.

1. Play around on the Internet. That’s right. Use this as your superhighway for information. Familiarize yourself with terms and conditions. But most importantly, get online and try out a variety of terms and amounts to finance. Keep in mind that the lowest monthly rate doesn’t always mean the lowest rate in the end.

Just because your rate is $40 cheaper a month than another quote doesn’t mean anything if it tacks on an extra five years to the loan. This is why utilizing an online mortgage calculator is the first step you should take.

2. Find a real estate agent. You don’t have to find a real estate agent, but many times a real estate agent will fight for the best price for you. With the demand on Canada’s housing market remaining high, it could really work to your advantage to have an experienced professional on your side.

3. Get a lawyer (a.k.a. as a notary in Quebec). It’s best to have all contracts reviewed before the purchase is made. Also, a lawyer will make sure that there are no liens or taxes owed on the property that are being overlooked.

4. Hire a home inspector. Home inspectors are trained to see problems that the average home owner won’t, such as termites, outdated electrical systems, and broken building codes.

5. Insurance broker. Purchasing mortgage insurance is not only in your family’s best interest, but you’ll also be able to finance a larger portion of the value of the home with mortgage insurance.

6. Hire an appraiser. An appraiser will assess the property value for a few hundred dollars and make sure that you aren’t paying over market value for what you’re getting.

The turbulent past few weeks in the global economy has been playing havoc with interest rates as the Bank of Canada was among several global central banks to drop their prime lending rates to try and slow down the economic downturn. The typical reaction from the Big Banks is to follow the Bank of Canada’s lead and decrease their Prime Rates – by a similar amount, although that didn’t happen last week. Royal Bank, TD and Scotiabank, along with the rest only dropped their Prime rate by 0.25% versus the 0.50% decrease by the Federal government. This resulted in Canadian mortgage rates actually increasing which again goes against normal market behaviour. This results in a very interesting question – what actually affects Canadian mortgage rates?

There are numerous factors that influence Canada’s economy including unemployment, gas prices, inflation, exports and imports, the government budget deficit or surplus and the list goes on, and it can be difficult to keep track of all these things and how they impact our daily lives and the mortgage rates we have to pay. Many people believe that the Bank of Canada’s monthly interest rate decisions directly affects all mortgage rates, but that’s not the case. Variable (ARM or adjustable mortgage rates) and fixed mortgage rates in Canada are actually influenced by different factors.

Fixed mortgage rates

Canadian fixed mortgage rates are affected by the price of government bonds and the bond yield. Bonds are typically considered safer investments than stocks, and when there is economic turmoil, investors usually will dump equities in favour of bonds, especially Government bonds, and when the stock market is booming, investors most likely would make a higher return on investment in equities.

This means there is a lower demand for bonds, so they decline in value and increase their yield. On the other hand, when the Canadian economy becomes less stable and stocks do not look as enticing, the demand for bonds increases and their yields decrease.

When the Canadian government’s longer term bond prices, such as the 5 year increase, this results in a decreased yield (return), typically reducing the five year borrowing costs for mortgage lenders who can then pass these savings onto customers in the form of lower 5 year fixed mortgage rates.

However, during these very unusual times, due to the lack of liquidity in the markets, banks around the world are hesitant to lend to each other and are hoarding cash, resulting in higher borrowing costs and lenders have to pass on these increased on to customers in the form of higher fixed mortgage rates.

Variable mortgage rates

The Bank of Canada plays a big part in determining variable mortgage rates as they set the target overnight target rate which they describe as:

“the average interest rate that the Bank wants to see in the marketplace for one-day (or “overnight”) loans between financial institutions.”

This is what the Big Banks based their Prime Rates on and the Bank of Canada doesn’t have any say in setting lender’s Prime Rates, they are determined by each financial institution independently and are based on the cost of short-term funds.

This is important as variable mortgage rates are advertised as Prime – 0.60% or similar, which means that the interest rate you’ll pay is directly related to the Prime rate, and will fluctuate whenever this changes. So, if the Bank of Canada drops rates by 0.50% or 50 basis points as they did last week, lenders usually decrease their Prime rate as well, as their cost of borrowing drops, meaning that your payments on a variable rate mortgage will decrease, a great option if interest rates are falling.

The problem with this scenario during this dreaded ‘credit crunch’ is that banks have stopped lending to each other in the short term as they’re scared they may not get their money back due to the instability in the system. As a result, interbank lending rates have increased and this higher cost is being passed onto customers in the form of higher interest rates.

Are fixed or variable rates the better option?

This is a very common question and really depends on each person’s situation and whether they can handle the changing mortgage rate payments, both financially and mentally, because the last thing you want to do is lose sleep because interest rates may increase, or if you’d feel more comfortable knowing the constant fixed rate you’d be paying over a few years.

There have been many studies and debates on which is better for borrowers and the analysis shows that historically Canadian homeowners would be better off by choosing variable rates. There was a recent report released by Dr. Milevsky, associate professor of finance, Schulich School of Business, York University, and he said that based on data from 1950 to 2007, the average Canadian could expect to save interest 90.1% of the time by choosing a variable-rate mortgage instead of a fixed. The average savings was $20,630 over 15 years per $100,000 borrowed, and he stated “over the long run, homeowners really do pay extra for fixed-rate mortgages.”

This may be something to keep in mind over the next few months as the Bank of Canada is forecasted to decrease mortgage rates, but keep in mind these are very unusual times and the best thing may be to expect the unexpected.