[Shayne]

On the same thread as a recent discussion at CC, has the spread between fixed rate mortgages and variable rate mortgages narrowed to the point where its now better to go with the fixed rate?

We've been shopping around to break our existing mortgages, looking and modeling ALL options.

The best variable rates we've been offered have been prime + 0.8% (3.3%). Fixed rates have now come down, and we were offered 3.95% for 5-year closed from one of the 5 big banks.

However, ScotiaBank is now offered 1-year rates at 3.0% - with the option of locking in at the posted 5 year rate minus 1.25% (4.2% as of today).

To me, it seems like they are wanting you to lock in for 1 year - my read on this is they predict rates will be up in 1 years time.

Am I reading too much into this? I know bond yields look to be rising again, and unless the earnings coming out now are horrible, could the stimulus be giving a bit of a bounce to the economy?

I call this the Save Now and hope to save later mortgage. No one predicted rates would be this low a year ago and no one can accurately predict where rates will be in a year. One year ago the posted rate at Scotia was 7.55% So 1.25% off of that is not much of a deal.

I would take the 3.95% or find a broker who can get you 3.69% with 20/20 prepayment priviledges.