I guess what I'm really asking is - what's the crystal ball saying interest rates will be for the next 6.5 years ;)
One nice thing about mortgages is you can work out the costs for the two options above plus breaking the current mortgage. Then compare to the alternatives in terms of variable rate mortgages and see what range of rates gets you to a win or a lose. That'll at least give you the sense of what's likely for outcomes.
The BoC is talking about staying at a low rate until the second half of 2022. I suspect that might drift into 2023 as I think there is too much optimism about how fast the pandemic will be "over". When the rate changes start it'll be 0.25% at a time. The mortgage debt situation in Canada is such that any fast rate increases would be such a shock to the system it's going to do more damage than good. Plus the BoC can start making changes by reducing the $Bs of bonds they are buying and work slowly on the interest rate.
If you asked me I'd say:
- 2021-2022 = no change/ultra low rates
- 2023-2025 = low slowly climbing rates
I've been on a variable rate mortgage since 2010 and have no plans to get a fixed rate mortgage. I keep extending out my amortization back to 25yrs and lowering my payment when I renew the mortgage every 5 years.
If I was in your shoes I'd be cranking away at Excel and then doing whatever saved me the most money based on my expectations for interest rates. Of course the future is uncertain so my thoughts on interest rates could be wrong.
