So we are now seeing the credit unions raise their variable rate mortgages as well over the past couple of days. This comes as no surprise to me that the push is on for fixed rate mortgages.
The banks make the most profit on fixed rate term mortgages. With today's current bond yield spread, the banks are making a fortune on mortgages. Why offer variables and make.50% spread on my money when i can make three times that on a fixed rate term? Welcome o the profit center of banks. Should we also mention that fixed mortgages carry a penalty of interest rate differential or three months, which ever is greater. The variable mortgages are just a straight three month interest penalty. Now we are in the lowest fixed rate mortgage territory again, which does make sense for some clients to choose that product. We are also in a period of the the lowest prime rate and the US is on record of not increasing prime rate till 2013. So the US announces no rate increase and within two weeks Canadian banks say variable rate mortgages are no longer profitable?
As with all major decision's, get all the information and the help of a full time professional to make the best choice for yourself.