We went with a fixed rate to make sure the rate doesn`t change for the next 5 years. We like to know the exact amount per month to budget our year. We also planing to pay extra payments and a lum sum at the end of the year to pay off the principal faster. We would like to illuminate the mortgage as soon as we can and why we are young.

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As of 19/09/2009 the variable rate is 2.35 % and the fixed 3.99 for 5 years. i am planning to by a house on 01/11/2009 but since it’s the beginning of winter the heating costs would be high, i was thinking of taking the variable rate for 5-6 month from now which will reduce my payments by around $ 150 a month to offset the heating costs and then switch to fixed mortgage. would this be a smart or risky move? are the interest rates expected to jump in the beginning of 2010?

NO ONE can say what WILL happen. What we CAN say is the rates you list are at or near historical lows and there is not much room to go down. An increase is significantly more likely than a decrease. A fixed rate is ALWAYS smarter than a variable rate. If rates drop, you can refinance at the lower rate. If they go up, you many not be able to.