Canadians are carrying mortgage debt into their 70s

According to a recent RBC poll, a disturbing mortgage trend was revealed, that one third of Canadian mortgage owners will carry that debt into their 70s. Specifically, 33% of these Canadians aged 55 and older still have 16+ years left on their mortgage term! This marks a contrast with the 72% of Canadians that say they hope to be mortgage-free by the time they reach the retirement age of 65. Somewhere along the line, Canadians aren’t planning their retirement smart enough or aren’t taking advantage of the necessary steps to reduce mortgage debt.

With regard to Canadians aged 18-34, more than a quarter project themselves to be mortgage-free by the of age 45. That’s two full decades before the retirement age of 65. Even more shocking is that one in ten predict to be mortgage-free by 35! Is this a product of a younger generation that is financially smarter and better at forecasting and planning? Or is it a symptom of naïve dreaming and unrealistic expectations? We’ll have to check back with RBC after a few years to confirm the results as time reveals all things.

On the positive side, 41% of Canadian homeowners are mortgage-free, representing the highest level it has been in 5 years. This is in part with the majority of baby boomers that have been at or near the end of their mortgages over the past year.

Other tidbits:

Almost everyone surveyed [96%] believes that the most important feature when choosing a mortgage is how low the rate is. That is why Ratehub.ca offers the necessary tools for Canadians to compare mortgage rates to find the best interest rate today.

Also important to 85% of Canadians are the mortgage features such as flexible prepayment options.

The poll found that most believe that rates will stay the same over the foreseeable future (the next 6 to 12 months). A statement we agree with in our last Monday Mortgage Update.

The annual CAAMP report released recently revealed that there was a 6% increase in variable rate mortgage market share for new mortgages in 2011. The RBC poll reflected this preference shift to use variable rates because Canadians believe mortgage rates will remain relatively flat over the next year.