BMO says fixed interest rates may be the better deal amid possible rate hike

Longer-term fixed mortgage rates may soon be a better deal than variable rates for homebuyers, according to a new report by BMO Capital Markets.

BMO (TSX:BMO) chief economist Douglas Porter and senior economist Benjamin Reitzes say that historically, choosing a variable mortgage rate has been more "cost-effective" than locking in on a five-year fixed rate, but this may no longer be the case as signs of an improving economy continue.

It's been long anticipated that both the Bank of Canada and the U.S. Federal Reserve will move to hike interest rates in 2015.

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Desiree Ofter

Desiree Ofter

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