Is it time to lock in your mortgage at a fixed rate, or stay with a variable rate?

With so many mortgage holders wondering if they should go with a variable-rate or a fixed-rate strategy, the subject of interest rate trends is unavoidable. I won’t fall into the trap of predicting interest rates simply because I would “ along with all the so-called financial experts“ have about a 50% chance of being correct.

However, it’s pretty safe to assume that the prime rate is not going to jump up very much and certainly not so fast, although rates are definitively headed upwards. If you have a variable-rate mortgage, you may be considering locking in your mortgage, although there is, at present, no sense of urgency to do so.

Another important fact is that fixed rates are most probably not going down. We have had a long run of relatively low interest rates, which may well have reached a bottom.

Here is what I suggest you do: simply contact your current mortgage lender to find out what your conversion rate and mortgage payment would be today if you were to convert your term to a fixed rate. Make sure you consult your favorite mortgage consultant to find out if you are offered the best possible deal on the market.

Then compare this fixed mortgage payment to what you are currently paying on your variable term. Now consider this amount as the premium you are willing to pay (or not) in order to get the security of knowing what your payments will be for the next five years.

If you are comfortable with variable rate terms and are optimistic about the future, just stay with a variable as so many experts will advise you to do. However, if your heart jumps every time the prime rate moves up and prefer a sense of stability, then lock your mortgage in. It’s all a matter of personal preference and lifestyle.

As for me, I’m sorry to say that I was in the business in 1982 and I still remember interest rates over 20%. Since 9/11, I don’t take anything for granted and I don’t listen much to predictions as I believe anything is possible. In fact, I locked in my term last week for peace of mind, but my co-workers are calling me “Chicken Little.” Now I can concentrate my worries on the price of gas and other utilities.