Mortgage: the variable rate still the best solution?

Despite the threat of an increase in Canada’s key rate in the coming months, the variable rate could still be a very good solution, according to an expert.

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“If we look at the last 11 years, even the last 20 years, having a variable rate is generally more profitable in the market. Now, today the key rate is at 0.25%, so it has never been so low in Canada,” said Malik Yaciubi, founding president of the online mortgage broker Nesto.

Recalling that each financial situation is different and that there is not necessarily a magic formula for everyone, the president of Nesto believes that the variable rate may be a good option in the coming year.

“What we generally see is an increase of 0.25% so if I take the margin between 0.9% (the best variable rate available) and 2.44% (the best fixed rate available), there is still room to be able to absorb an increase to catch up with the fixed cost, so after that, it’s a question of risk management and stress management,” explains the president of Nesto.

The expert points out that the increase of 0.25% expected in the coming weeks represents, for a mortgage of $300,000, an increase of $35 per month.

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