SHOULD YOU CHOOSE A VARIABLE RATE MORTGAGE?

Variable-rate mortgages continue to be a strong option for many homeowners, whether you’re purchasing, refinancing, or renewing. But with so much noise in the media about “locking in now,” it’s easy to feel pressured into making a rushed decision.

See why staying variable can still make sense — and what most people overlook. 👇

There’s a big difference between market commentary and real mortgage strategy, and understanding the nuances can save you thousands in unnecessary penalties and rate jumps.

1️⃣ Why You Shouldn’t Panic About Locking In

Much of the advice urging borrowers to lock in comes from institutions that profit when you do.

✔️ banks benefit from higher fixed-rate margins

✔️ banks profit from larger fixed-rate penalties

✔️ variable penalties are far lower

Economists employed by large banks are not neutral advisors — their incentives are aligned with their shareholders, not your financial outcome.

2️⃣ Not All Experts Understand Mortgage Penalties

Real estate analysts may understand the housing market, but many do not understand penalty math.

✔️ they overlook how fixed penalties are calculated

✔️ they underestimate how often borrowers break terms

✔️ they don’t account for individual borrower patterns

Most borrowers break their mortgage before maturity — and the penalty difference can be massive.

3️⃣ What Broker Experience Shows

Long-term broker data tells a different story than headline commentary.

✔️ most borrowers break their term early

✔️ variable penalties are far smaller and more manageable

✔️ fixed-rate penalties can be 5–10× higher

Experience matters — and real mortgage data often contradicts dramatic media narratives.

4️⃣ When Staying Variable Makes Sense

If you currently hold a strong variable rate (e.g., Prime -0.65% to Prime -1.00%), locking in could mean:

✔️ an immediate rate increase

✔️ higher payment costs

✔️ losing future flexibility

You’d be giving yourself a rate hike months or even years before the market forces one.

5️⃣ When You Should Reconsider Your Variable Rate

If your discount is shallow (e.g., Prime -0.35%), restructuring may improve your position.

✔️ switch to a deeper discount

✔️ reduce interest costs

✔️ increase protection against rising rates

Not all variable terms are equal — and optimizing the discount can make a major difference.

6️⃣ What About Rising Interest Rates?

Short-term hikes may occur, but rate cycles are not permanent.

✔️ central banks raise rates to control the economy

✔️ contractions eventually force rates down

✔️ locking in removes your ability to benefit later

Variable rates provide flexibility during changing economic cycles, especially when long-term uncertainty is high.

💬 Final Thought

Variable-rate mortgages aren’t one-size-fits-all, but they continue to offer major advantages for many households — lower penalties, better flexibility, and long-term cost efficiency when used strategically.

If you’d like us to review your current rate, analyze penalties, or determine whether restructuring makes sense, send The Frontline Mortgage Group a message anytime.