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O’Leary only wants Fixed rate mortgages…really?

CBC News did a report about Renting vs. Buying, earlier this week.. And it featured Kevin O’Leary and Amanda Lang, two well-known TV personalities….Ok, we covered Rent vs. Own in great detail just a few months ago…  And I also talked about using your home as a retirement fund, earlier this week in my Baby Boomer 10 year retirement plan article.. But this isn’t what I want to talk about…  I want to talk about some comments O’Leary made about Fixed Rates, during that report.


I’m taking a chance by speaking out against Kevin O’Leary.   But I must speak up regarding something as important as this…   So here it goes…

O’Leary is starting a new mortgage company….Congrats!  I’m sure he’ll do well.    He said his company would ONLY offer Fixed rate mortgages because Mr. O’Leary doesn’t believe ANYONE should be in a Variable Rate mortgage…. he went on to say that because Fixed Rates are so low, you would have to be insane to stay in a Variable Rate…Hmm.. well, if you are one of my clients then you know how absurd this statement is…


Over 80% of my clients are, or have been in a Variable rate mortgage… Most of them enjoyed rates of Prime less 0.75% or better… some even had Prime less 0.90%..and for a while, they enjoyed rates as low at 1.35%!!!  During the 2008-09 recession, we were inundated with TV and Media personalities telling us to lock into a 5 year Fixed rate mortgage because of the sub-prime mortgage crisis and stock market crash…  You remember that?  I do… and I recommended clients do the opposite..  take short-term mortgages until the dust settled on interest rates…  This WAS NOT the popular advice…  It was panic time…. but that’s when you need to remain calm and review the facts…

Fortunately, most of my clients didn’t listen to the media and followed my advice.   I recommended several different products… 6 months, 1 year, 2 year, 3 year and even the short-lived 3 yr Variable rate… In ALL cases, it was the right product choice…. It was the best option at the time for that particular client…My clients have saved $$thousands each and every year through my advice!

(historical fact… Variable rate mortgages have been a cheaper way to finance your home in over 88% of time…Professor Milevsky study.) 


Unfortunately, new Variable rate products aren’t priced as well today…. This is probably that other 12% of the time….And although I am not recommending Variable rates today for most borrowers, it still might be the right product for some…  To say everyone should get out of their Variable rate is just bad advice!  The GOAL IS TO PAY THE LEAST AMOUNT OF MONEY TO OWN OUR HOMES!

My criteria for choosing Fixed over Variable depends on many factors but here are 3 things I pay close attention to:

1-Variable rate pricing not as attractive.. the best Variable rate today is Prime less 0.35% (3.00% less 0.35% = 2.65%)…..

2-Fixed rates are at historical lows (just over 3.00%).

3-the spread between 5 yr Fixed and Variable should be over 1.00%…today it’s less than 0.50%.

Add all of this up and it’s an easy choice today….I cannot recommend Variable Rate for most NEW mortgages….


If you have a Variable rate of Prime less 0.75%, I would stick with that… that’s 2.25%…  why start paying over 3.00%?   There is no forecast for immediate rate increases…   And this is where I am very concerned…. We have a very well known TV personality that comes out and says everyone should lock into a Fixed Rate mortgage…. I’m sure the BANKS would love to see you out of a 2.25% mortgage and into a 3.00%+ rate.   I completely disagree with O’Leary.    There is no ‘One size fits all’ mortgage.   Everyone is different and has different needs…   I’d be very careful about listening to anyone that wants to pigeon-hole all Canadians.

BEWARE THE TV EXPERTS…  Just a final note….  How many times have you heard ‘Rates are going up soon’ in the last 4 years.?  You must lock into a Fixed Rate…    I hear it everyday…. and if my clients listened to these ‘Experts’ they would have been out of their Prime less 0.75% Variable rate and into a 4.00%, 5.00% or even 6.00% fixed rate mortgage!   Those that have listened to the facts have done extremely well.   There isn’t a crystal ball… it’s not magic, it’s simply viewing the mortgage landscape, current economic trends, monitoring inflation rates and paying attention to govt and policy makers… I really don’t watch the news or listen to any media or TV personalities.   I just look at the facts and present them here.

As always, if you have any comments or questions or would like to know what strategy is best for you, give your mortgage broker a call.. or call me if you don’t have a broker.  I’d be happy to help.

Steve Garganis 416 224 0114


Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

11 thoughts on “O’Leary only wants Fixed rate mortgages…really? Leave a comment

  1. “…he went on to say that because Fixed Rates are so low, you would have to be insane to stay in a Variable Rate…Hmm.. well, if you are one of my clients then you know how absurd this statement is…”

    Steve, you need a reality check. What client would you put TODAY into a variable rate?
    Sure – the variable was the best product by far over the last 10+ years…. but lets talk TODAY.
    I also have clients that have p-.95 from a few years back, I have told them they need to have their finger on the trigger to lock in should rates go up. I am sure you have told your clients the same.
    So what is wrong with offering only a fixed product TODAY? My underwriters are telling me the variable mortgages are now less than 1% of the applications coming in. Not even worth having them on the books.
    Sorry – but your article seems to say “…this is not good advice for what the market was a bunch of years ago…” – funny thing is, it’s good advice today.
    Just saying…

    • Hi Ontario Broker,

      O’Leary’s comments were very specific… He said it was ‘insane’ to be in a Variable Rate product today… ‘you should lock in’ to fixed rates…and that’s just not good advice.. I have clients with Prime less 0.75% or better, and they are enjoying rates of 2.25% or better… Would you tell them to lock into a Fixed rate today? I wouldn’t… but many others would.. it’s the safe play… I think my clients will continue to enjoy low rates for some time to come given the uncertainty in the US, European and even Canadian economies…. I don’t think anyone is expecting the Bank of Canada to raise rates anytime soon… why would you want to start paying more today?? (I’m sure the Banks would love that).

      There are many situations where shorter terms and even new Variable Rate products still make sense… for example: borrowing for short term… Variable rate has a capped penalty at 3 mths interest vs a potential larger penalty…

      To me, it’s ‘insane’ to say that everyone should get out of their Variable rate and into Fixed… and to say that everyone should only choose fixed today…

      And yes, I do have my clients on alert.. I am watching rates and trends closely so that I can advise them if and when they should lock into a Fixed rate.. remember, if I listened to the Banks or Experts in the media then my clients would have been in Fixed rates for the last several years, if not forever.. paying much higher interest rates than they have today….

      It takes a certain level of risk tolerance to be in a Variable rate.. but the savings could be worth it..and it has been worth it..

      I stand by my recommendations… and anyone is welcome to view my historical recommendations online… I don’t think you will see any wrong recommendations…


  2. Steve Garganis – successful mortgage broker! Kevin O’Leary successful entertainer! Who are you going to for mortgage advice?

  3. Great blog and advice, I also recommended variable mortgages to my clients for many years, contrary to the bank fear mongering. I even had a few clients receive pressure phone calls from banks to lock in while they were at my arranged 1.25%, unfortunately they only to called me a few months later, to refinance to another variable.

    Of course those days are gone as banks only offer variable discounts when there is risk. Currently we have no risk so the common best offer is a fixed mortgage.

    Kevin O’Leary needs to stay with things he knows, guitars and entertainment, oh ya, and wine. Friends have enjoyed his company with many expensive bottles going down in a night.

    Leave the mortgage business to independent professionals that actually follow it on a daily basis and are truly interested in providing sound advice to their clients. My clients like yours have saved thousands since the big lock in push, “rates are at all time low”, of 2008-present.

    If you are a mortgage consumer and reading this and trusted your bank like many did (lock in at 5%, oops paid penalty, 4% fixed, oops paid another penalty, now looking for 3%) do yourself a favour, call an experienced independent licensed mortgage professional.

    Great post!

    • Hi Peter,

      You bring up a great point. I wonder how many people listened to their Banker or the ‘Financial Experts’ on TV and got out of their Variable rate locked into a fixed rate at 5% or 4%? And now regret this move….

      Is this how to save money on your mortgage?

      Its hard to avoid all the media experts and tv personalities. We seem get bombarded with info 24-7 through radio, tv and internet. Try to listen to the professionals. Check out the track record of the advisor. He who speaks loudest isn’t always right.

  4. Why are you worried about what Kevin O. says in this? His opinion is interesting, but if anyone is actually taking his advice seriously they don’t look at Ms. Lang’s face much during their Lang & O’Leary show. Listening to Kevin’s advice for finances is much like taking Don Cherry’s advice about Hockey.

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