The table below lays out some of the key differences as well as the pros and cons of fixed and variable mortgage rates.
| Fixed mortgage rate | Variable mortgage rate | |
|---|---|---|
| Description | Set for the duration of the mortgage term. Mortgage interest rate and payments are fixed. | Fluctuates with the market interest rate, known as the ‘prime rate.’ Mortgage payments either fluctuate with fluctuations in the prime rate, or the interest portion of the payment varies. |
| Pros | Can essentially ‘set it and forget it’, regardless of whether rates rise or fall. Eases budgeting anxiety and offers stability. | Examined historically, variable rates have proven to be less expensive over time. |
| Cons | If the difference between the variable and fixed rate is significant, it may not be worth paying a premium for the stability protection of a fixed rate. | Set for the duration of the mortgage term. Mortgage interest rates and payments are fixed. |
