Mortgage Survey: Canadians Favour Fixed Mortgages Over Variable
The firm of Harris Decima recently conducted a survey across Canada regarding mortgages. In it they found that for the third straight year, Canadians tend to favour fixed rate mortgages over the variable. Another find, on the issue of the mortgage rates themselves, was that the more Canadians are of the belief that the low mortgage rates of today will be around for at least the next year.
On the fixed versus variable mortgage issue, 45 percent of those surveyed would select a fixed mortgage. Of those in the 25 to 34 year old demographic, 54 percent would make a similar choice. This indicates that most first home buyers would lean this direction. Some 26 percent of those surveyed would choose a variable mortgage, and 25 percent were in the uncertain column. That 25 percent is a marked increase over the 16 percent that were in the undecided column in the 2012 survey.
Colette Delaney, CIBC Executive Vice President of Mortgage, Lending, Insurance and Deposit Products, responded to the survey with a reminder that picking the right mortgage is important. If you select a fixed mortgage with the lower interest seen today, you will pay down the mortgage considerably faster, decreasing your overall debt load.
Rates, Will They Go Up?
On the question of interest rates, 46 percent of those surveyed believe that the ultra low mortgage rates we are enjoying today will stay the same at least through the end of 2013. Prior polls show a different mindset, with more Canadians believing the interests rates would increase much sooner.
On the plus side, this does give people the ability to get mortgages for historically low costs. On the not so great side, Canadians may become too complacent about their loans and end up with the equivalent of sticker shock when the Bank of Canada does decide to act.
Paying down as much debt as possible during this time of low interest rates is one way to insure your financial health. In fact, CIBC released their own poll this past January that noted that Canadians saw paying down their debt loads as their leading financial goal for 2013. That has been the number one goal nationwide for the last three years.
CIBC has a suggestion on how to pay off that mortgage faster. Calculate your payments based on what they would be if the interest rates were one or two percent higher. Pay that amount. The excess will come off the principal, paying down the mortgage much faster.