Should you lock in a fixed rate or go with a variable rate in this market?

For anyone unfamiliar about these type of interest rates, a variable rate will fluctuate up or down with how the Bank of Canada changes their terminal rate.

Fixed rate are determined based on how the 10 Year Bond Yield is moving and locks in a stable rate for mortgage holders for a certain period of time.

In my opinion, the time for locking in a fixed rate is over as we are extremely close to reaching the target terminal rate for the bank of Canada which 4.5% and we are currently sitting at 4.25%.

At some point this year the bank of Canada will be forced to start reducing the interest rate as it will take a huge toll in the economy,

We are already seeing banks call their clients with variable rates and incentivizing them with cash back in order to switch to a fixed rate.

The banks are not in the business of losing money and if they are doing that it raises the question,

Do they know something that the rest of us don’t about interest rates coming down in the near future?

What do YOU think?

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