“A lot of people, when they see fixed rates really starting to spike up, are going to say, ‘Well, let me move over from my variable to fixed,’” he said. “In some cases, that might be a good idea, but in a lot of cases it’s actually not.
“Over the next month or so, if the [bond yield] trend continues, you’re going to start seeing those fixed rates dropping and, all of a sudden, these clients that [already] took fixed are not going to be able to get that lower interest rate. They’re going to be locked in because of the penalties they’re going to have to pay.”
With that in mind, Kilakos said his advice to variable-rate clients would be to stick with their current arrangement in the knowledge that they can switch to a potentially lower fixed rate somewhere down the line.
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