When you say better, what do you mean ? In terms of monthly payments it is lower. It also depends on what you plan to do in the future - sell the house after 3 years, keep the house, pre-pay as fast as you can, etc. The 2 types of mortgages have their own positives and negatives.

This is a hard question to answer. What I advise clients is if they find that the fixed rate is affordable given their current consideration and they do not want any fluctuation in rates, they should lock in. Historically in the last 10 years, the variable rate mortgages have out performed the fixed rate mortages. This is prior to all of the economic issues we are having at the moment. There are also some positive things about variable like lenders normally use 3 months interest as a penalty to get out of a mortgage instead of the IRD concept. You can also follow what the economists are saying abot overnight lending rates if the Bank of Canada will change them soon. You can only speculate based on what you believe will happen in the future. If the difference between fixed and variable is less than 1%, it may be worth it.

It may go as high as 5.5%.