As housing prices continue to soar, homebuyers are becoming more likely to use a variable rate mortgage and all the risks that come with a prime-based interest rate, reports the Financial Post.

In many instances, the rate for a five-year fixed-rate mortgage has fallen as low as 3.09 per cent. Many of the major banks and other lenders have responded to this by offering similar rates or special promotional offers. Fixed rates have been on the decline as of late, as maximum yields in the bond market have decreased. 

Variable rate mortgages have rates as low as 2.35 per cent, 65 percentage points less than the base prime rate of 3 per cent. Recently, it has become easier to get a variable rate mortgage, especially since the government modified the rules in April 2010.

The changes permitted anyone applying for a variable rate to qualify based on the five-year posted rate.

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