Most Canadians have a fixed rate mortgage but is that about to change?
A new survey from CIBC shows that, although 72% of Canadians have an FRM currently, just 54% of respondents said they would opt for a fixed rate mortgage if they signed the papers today.
However, the remaining 46% of those who are homeowners or plan to buy a home are not necessarily planning to pick a variable product; just 19% said they would while 26% are undecided and may need some help from a mortgage professional.
The survey also shows that 83% of Canadians would prefer stability over risk, suggesting a shift away from fixed rate mortgages is unlikely.
"Most Canadians believe a fixed mortgage is the way to go – especially those in the early days of paying down their mortgage or juggling household expenses," says Tracy Best, Senior Vice President, Mobile Advice, CIBC. "Conversely, for those considering a variable mortgage, they may benefit from a lower rate initially but also need to be comfortable that rates may change, potentially several times, over the course of the mortgage. If rates go up, they need to ask themselves how that might impact their lifestyle and financial health."
Average mortgage balance
The CIBC research shows that the average Canadian homeowner has mortgage debt of $170,000 but that rises to $252,000 for those earning $100K or more.
Among over 55s, 22% have a mortgage with a balance outstanding of $112,600 on average. Almost half of this demographic expect to carry mortgage debt into retirement while only 22% expect to be mortgage-free within 5 years.