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Should you choose a variable mortgage rate in 2024?

Rate drops are coming. Will a variable rate help you save more—or sleep less?

The Bank of Canada has said interest rates are high enough now (you can roll your eyes). So, we wait for prime rates to start their drop and variable mortgage rates right along with them.

Weighing variable rate FOMO or JOMO

Canadians may decide on a variable rate due to big-time FOMO—fear of missing out on the interest savings and mortgage payment relief that would come with every rate drop. With a fixed rate, you’d watch rates decline from the sidelines.

Or, there’s the JOMO choice. The joy of missing out on any risk that a variable rate poses while you happily lock into a great fixed rate and sleep soundly until you (ideally) renew into lowered market rates.

Despite enduring the fastest variable-rate rise in over 20 years, this rate type is worth a close look again—with the potential to save as much as $12K over five years compared to locking into a five-year fixed rate.

A reminder of variable-rate benefits

After the equivalent of 19 rate hikes (0.25% increments) since March 2022, the variable narrative has shifted back to its benefits during a period of declining rates: 

  • Instant budget relief with each rate drop (with an adjusting-payment variable mortgage).
  • Amortization reduced with each rate drop, helping you pay off your mortgage faster (with a big bank fixed-payment variable mortgage).
  • Saving more over the life of your mortgage (historically shown to be the case vs. fixed rates).
  • Lock into a fixed rate at any time, penalty-free (depending on the lender). 
  • Pay less in penalties than a fixed-rate mortgage if you need to break mid-term.

How fast (or far) might variable rates fall?

Some economists and experts, like True North Mortgage CEO Dan Eisner, predict prime rates might fall 1.5% by year-end and go another 0.5% lower the next year. That’s at least eight predicted rate drops (0.25% increments) within the next couple of years.

Should you resist variable-rate FOMO?

Despite the strong allure of rate drops on the horizon, a variable rate isn’t for everyone. Prime rates (directly  affected by Bank of Canada rate decisions) may go up again if inflation doesn’t behave, which may lead to ‘rate regret’ if you usually prefer the relative safety of a fixed rate.

Fixed rates have come down from their October 2023 peak, which may help you better handle locking into a fixed rate, choosing from your best term rates available.

YOLO. Get your best rate to save the most.

You only live once (unless you have nine lives like a cat or Rick Astley), so you may as well save the most on your mortgage.

True North makes it easy and stress-free. Their friendly, expert brokers offer exceptional five-star service, guaranteeing your best rate with unbiased mortgage advice for your 2024 rate decisions. 

Give True North a shout RN, and they’ll BRB with your best rate and mortgage advice to save thousands, online or in-store. Contact Canada’s No. 1 Mortgage Broker today.

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