The rise of the variable rate?

Fixed or variable? It’s a debate brokers thought they left behind but is now coming up more and more as fixed rates climb and concerns about a Central Bank move fade into the distance.

“You’re seeing a one per cent spread between variable and fixed so it almost doesn’t make sense to go with a fixed rate right now,” James Harrison of Mortgages.ca told MortgageBrokerNews.ca. “It didn’t make sense while the fixed rates were historically low; now the discounts on variable rates are getting better and the fixed rates are increasing.”

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Ratehub.com took to its Twitter account to shed some light on the topic Monday.

“Earlier this year, 80% of our site users showed interest in fixed rates, but what will happen now with the spread b/w variable rates?” the company mused.

Not every broker is willing to turn his back on fixed rates just yet, however.

“I still think fixed rates are at all-time lows, even though we’ve seen them rise recently,” Mauro Di Cosola of Dominion Lending Centres told MortgageBrokerNews.ca. “In the overall scheme of things I still think fixed rates are the way to go. 3.59, 3.69 per cent isn’t too high. If somebody were to get a five year fixed rate at 3.59 per cent I think they’re still sitting pretty.”

Di Cosola does admit that clients are more willing to consider a variable rate, though; a trend that may be signally a change in attitude.

“I have seen clients tend to look at the variables a little bit more than they otherwise would.”

Of course, every situation is different and the type of mortgage a client depends largely on the client’s priorities.

“It depends on the client wants to have no trouble sleeping at night, I would suggest a fixed rate,” Di Cosola said. “If they want the lowest rate I would be more inclined to suggest a variable rate, in a rising (fixed) interest rate environment.

“No one has a crystal ball so the variable products could go up as well. At least you know what you’re getting when you have a fixed rate: If a client doesn’t like the gyrations of the market, fixed rates give them piece of mind.”