2014

CIBC Mortgage Poll: Canadians think the time is right to lock into a fixed mortgage

Annual poll finds nearly half of all Canadians would choose a fixed rate mortgage; more Canadians believe today's low interest rates will remain unchanged over the next year

TORONTO, March 14, 2013 /CNW/ - A new CIBC (CM: TSX) (CM: NYSE) Poll conducted by Harris/Decima reveals Canadians are leaning towards fixed-rate mortgages this Spring, marking the third consecutive year Canadians have chosen fixed over variable. The poll also reveals a change in Canadians' expectations for interest rates, with more Canadians now believing today's low rates will remain in place for at least the next 12 months.

Highlights of the poll include:

  • 46 per cent of Canadians believe today's low rates will remain unchanged over the next year, a notable increase from the same poll two years ago when only 24 per cent of Canadians believed interest rates would remain low
  • 45 per cent of Canadians said they would choose a fixed rate mortgage if they had to decide today; fixed rate mortgages were most popular among 25 - 34 year olds, with 54 cent stating they would select a fixed rate mortgage, likely due to the predictability a fixed rate offers to first time home buyers
  • 26 per cent of Canadians said they would choose a variable rate mortgage
  • Another 25 per cent said they were uncertain which mortgage would be right for them, an increase over the 16 per cent who were undecided in 2012

"Deciding between a fixed or variable rate mortgage is one of the most important decisions in finding a mortgage that is right for you," said Colette Delaney, Executive Vice President of Mortgage, Lending, Insurance and Deposit Products, CIBC.

Ms. Delaney noted that balancing debt, savings and other financial goals is important to achieving what matters to you in the long term. A predictable mortgage payment at today's low interest rates can help you to pay down your mortgage faster and minimize interest costs, which can keep your broader financial goals on track. "Your mortgage should fit your life, you shouldn't have to re-arrange your life for your mortgage, and that's where an advisor can help you determine the mortgage terms and payment that fit with your financial goals."

While fixed mortgages were popular in the poll, this year's results also saw an increase in Canadians uncertain as to whether a fixed or variable rate mortgage would be right for them, highlighting the importance of getting advice about which option is the best fit with your finances.

When will rates rise?  Canadians see rates remaining low

46 per cent of Canadians believe today's low rates will remain unchanged over the next 12 months. This is a change from past poll results, where Canadians were more likely to believe that these historically low mortgage rates would be increasing in the short term.

This trend suggests Canadians could face challenges in the future if they don't consider rate changes as part of their long term mortgage strategy.

"Our poll suggests that some Canadians are growing accustomed to the low rates we are experiencing, however it's important to take a long term view when deciding which mortgage is right for you," said Ms. Delaney. "You need to plan ahead for your next mortgage term and consider the impact to your budget if you renew at higher rates a few years down the road."

Low Rates an Opportunity to Accelerate Debt Repayment

In a poll released by CIBC in January 2013, Canadians identified paying down debt as their number one financial priority for 2013 for the third year in a row. Ms. Delaney notes that low mortgage rates can help Canadians to accelerate their debt repayment. "With debt repayment a top priority for Canadians again in 2013, there is an opportunity to take advantage of today's low mortgage rates to reduce your mortgage principal faster."

To further accelerate debt repayment, one strategy offered by CIBC is to set your mortgage payment at the amount it would be if rates were one to two per cent higher. Not only does this help to reduce the principal amount owing, but it also prepares Canadians for future rate increases.

"Your mortgage is one component of your overall financial plan, which means you can't choose a mortgage purely on rate" added Ms. Delaney. "A number of factors, including amortization, the flexibility to make extra payments, and whether or not you have other debt should all be considered when choosing the mortgage that's right for you."

KEY POLL FINDINGS

Percentage of Canadians who would choose a fixed rate mortgage if they were to acquire, refinance or renew a mortgage today, by region:

  2013 2012 2011
National  45% 50% 39%
Atlantic Canada 37% 63% 43%
Quebec 45% 51% 45%
Ontario 41% 49% 35%
Manitoba and Saskatchewan 64% 46% 33%
Alberta 47% 49% 36%
British Columbia 49% 48% 38%

Percentage of Canadians who would choose a fixed rate mortgage if they were to acquire, refinance or renew a mortgage today, by age:

National   45%
18-24    39%
25-34    54%
35-44    46%
45-54    45%
55-64    46%
65+    35%

Percentage of Canadians who would choose a variable rate mortgage if they were to acquire, refinance or renew a mortgage today, by region:

  2013 2012 2011
National  26% 32% 32%
Atlantic Canada 25% 25% 23%
Quebec 32% 37% 31%
Ontario 26% 31% 33%
Manitoba and Saskatchewan 18% 37% 31%
Alberta 26% 32% 35%
British Columbia 22% 27% 31%

Percentage of Canadians who believe mortgage rates will be the same 12 months from now, by region:

  2013 2012 2011
National  46% 42% 24%
Atlantic Canada 38% 32% 19%
Quebec 48% 49% 28%
Ontario 46% 42% 21%
Manitoba and Saskatchewan 45% 39% 23%
Alberta 47% 40% 27%
British Columbia 45% 41% 25%

*Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in a sample of 1,006 Canadians between January 24-28, 2013. A sample of this size has a National margin of error of +/-3.1%, 19 times out of 20

CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com

 

 

 

SOURCE CIBC



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