If you currently have a variable rate mortgage:

Variable rate mortgages are normally sold in 3 or 5 year terms – the standard for 5 year terms over the last 5 years have been offered at Prime minus a certain percentage.

Example of what the rate increase represents for you:

For instance, if you have a mortgage at a rate of prime minus .50%.

Your rate yesterday would have been 3.20% – .50% = 2.70%.

Your rate today would be 3.45% – .50% = 2.95%.

Does this mean that it is time to convert to a fixed rate?!?

Historically speaking, variable rate mortgages have always outperformed fixed rate mortgages, so from this perspective, the answer is:  “No”.

Furthermore, converting to a fixed rate would entail a mortgage rate of approximately 3.49-3.59%, this means that the answer is still : “No”. Your variable rate mortgage remains much lower than a fixed rate, and theoretically could handle another two quarter percent rate hikes before reaching that rate.

  The Ultimate Deciding Factor:

If you cannot sleep at night because you are worrying about the possibility of the prime rate increasing again

and thereby affecting your mortgage rate / payment:

you should convert to a fixed rate!

N.B. One error in this article to be noted: TD Bank has set its prime rate at 3.60% rather than 3.45%.