Fixed or Variable-Rate Mortgage… the analysis.

June 29, 2008

I’ve been searching for information on mortgages, particularly wondering if fixed or variable mortgages were better for me. A lot of sites referenced Mortgage Financing: Floating Your Way to Prosperity (2001) which is from the Individual Finance and Insurance Decisions Centre. This turns out to be at University of Toronto, so I searched about and found two more recent papers: Mortgage Financing: Should You Still Float? Four Answers (2004) and Mortgage Financing 2007:
What Now?
. I’m going through all three papers, but the basic consensus is that it is cheaper the vast majority of the time to go with a variable rate (the first article says 88% of the time, and it is very analytic). I don’t mind doing what people say, but I have to understand it… as much as I can.

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