The Insider's Scoop

No one can ever know for certain when it is the best time to buy a house or if it is better to lock into a fixed rate versus a variable mortgage rate. What we do know is that prime rate (currently 3.50%) has been rapidly dropping and this leads many of us to think "should we have gone with a variable?" Maybe, maybe not. Returning from a recent lender presentation, a leading bank gave their opinions about the market and here is what they had to share:

• the Bank of Canada will likely further decrease prime rate in January on their next 'rate date ' - January 20th, 2009.

• this will likely be the last rate decrease for sometime at which point prime rate will begin to rise. When it does rise, it will do so at a speed much faster than it has taken for it to lower to the rate it is currently at.

• fixed rates will likely be at their lowest in February 2009. Keep in mind that most financial institutions have a 90-120 day rate hold so if you are looking to purchase a home or renew your mortgage within that time frame, February will be the time to lock that rate in.

Ultimately it is up to the individual consumer to determine whether or not they would be able to sleep at night (determining their own, personal risk-tolerance) if prime rate were to drastically increase or would you prefer a certain level of peace-of-mind with a fixed rate?