From all accounts, floating-rate mortgages continue to outsell 5-year fixed terms.
It doesn’t hurt that variables are priced at an average of 184 basis points below 5-year fixed rates.
Come June 22, however, more people will be questioning their faith in variables. That’s when we’ll receive May inflation data, and it should be enough to give over-leveraged borrowers the chills. Economists are calling for a CPI reading of anywhere from 7.1% to 7.5%. That would make it the most menacing inflation print since 1983 when prime rate was 11.5%.
As some second-guess the “variable-rate advantage,” we’ll hear more people asking things like, “Is it too late to lock in?”
But with that 184-basis point fixed-variable spread intact (for now), most will probably conclude that floating rates still have too much of a lead to pass up.
