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Is it time to lock-in your mortgage? Bank of Montreal economists say yes

Is it time to lock-in your mortgage? Bank of Montreal economists say yes

OTTAWA - The Bank of Montreal has some advice for Canadians on super-low variable mortgage rates — time to lock in.

Economists with one of Canada's leading banks says long-term rates have been discounted so much of late that the advantage of variable mortgages have all but disappeared.

Some banks are offering five-year locked in terms at the posted rate of 2.99 per cent.

Economists Douglas Porter and Benjamin Reitzes say that since 1975, variable rates have been the better choice 84 per cent of the time, but that calculation may soon no longer be valid.

Both say that with economic conditions firming, so will interest rates.

The bond markets, in particular, are sending clear signals that higher interest rates are on the horizon, they note, with Canada five-year bond yields climbing by more than 50 basis points in the past three months alone.

As bond yields rise, the cost of funds also climb and lenders will be forced to pass them on to customers, they argue.

The analysts say even if variable rates take some time before rising, Canadians may not see such low rates for fixed mortgages for much longer.