Discussions

Time to renew my mortgage soon and with bank interest going down what would you suggest: to lock it for 1 year or 5 year term? I don't know how down the interest will go so i could lock it for a year if still going down then lock it for longer. But if i lock it for 5 year term and interests still go down I am not in winning side.

If you like to Gamble just a little you could put it on a low Variable rate and if the rates go lower thats even better for you as you will pay down the mortgage faster ! buts its a risk

Gee it's pretty low right now. I'd be locking it in for as long as possible. They've been warning us of a pending sharp increase for years. Lock it in for some peace of mind.

With the interest rates as low as they are today, there is only one way to go and this is UP.  
Take advantage of the low rates now.

Could you afford a 1-2% increase in your mortgage rate? Lending rates won't skyrocket overnight. The economy is too fragile so those that control the monetary rates simply won't let it happen. If the Canadian and global economies start to heat up (and that won't be happening quickly), then rates will start to creep up.  
 
Depending on the type of mortgage you sign up for, you could get a variable rate mortgage with the option to lock it in if rates start to rise. But there are so many options on the market, you will have to figure out which one works for you. Talk to a mortgage broker (not just your bank). Depending on your needs, they may be able to find you a much better rate based on your criteria.  
 
The biggest considerations are what you can afford to pay and your comfort level with a little bit of risk. With a fixed rate, you never have to worry about anything except what the rates will when your term is up, but for that luxury, you are paying your bank more money for the same house you're living in.  
 
Different mortgages come with different sets of restrictions and penalties. For example, if you think you might be likely to move within the term, you would want a mortgage with terms that are somewhat forgiving for an early change. If you're sure you won't be, you might be able to get a slightly lower rate if you give up that option (so you'd face higher penalties if you did break the mortgage before the term was up). So you need to find out what the rules and options are, and how they match up to your needs.  
 
I've been a home owner for 15 years now (with multiple homes and mortgages with different providers), and I've heard the "rates are so low right now, you should lock in!" every time I've had a conversation about my mortgage. I've stuck with a variable rate mortgage all the way through, and have saved thousands of dollars in interest in the process. The way I've done my mortgage is to have a 5 year term with a variable rate (discounted below the advertised rate) with the ability to lock it in. I then took what my payment would be over the same amortization period if I was paying 5%. I then made that my payment amount. This increases my principal repayment by the difference between the variable and fixed rates, and gives me a cushion for fluctuations in the variable rate. I still have the option to lock in at the fixed rate if the economy starts to heat up and they start raising rates, but for now can take advantage of the low rates available.  
 
Good luck with your decision!