I understand that mathematically, over the full term of the mortgage, you’ll likely save money with variable, but damn does a fixed rate feel secure. It’s great not having to worry about what my monthly payment will be, and to me that’s worth more than the potential financial gain of variable.
I guess it depends. I purchased my home with a 5 years fixed rate in 2019, just before COVID hit and the rates dropped dramatically. While I feel good now when rates are much higher, I’ll admit I really felt stupid when my friends were getting rates around 1.5% a few months after I got 2.74%.
I ran the numbers recently, and if the rate was to stay around what it currently is until late 2024 when my renewal comes up, I would have more equity in my house if I had gone variable instead of fixed, even though I’d have hit the trigger rate, which would be a burden on my budget.
But it’s always easy to get it right in hindsight.
Agreed that it’s almost always better to go variable than fixed. The lender is setting both rates, and they’re going to pad the fixed rate using their knowledge and experience to ensure they usually come out ahead. That said, we’ve always gone with a fixed rate because it feels better knowing exactly how we’re going to be sitting at the end of the term and changes in the rates don’t affect us until renewal time.