Canadians increasingly opting for peace of mind when it comes to their mortgage: CIBC

A new survey finds Canadians not banking on further rate cuts and are electing to lock in the benefits of a fixed-rate mortgage

TORONTO, March 30, 2015 /CNW/ - As the spring home-buying season approaches, a new CIBC (TSX: CM) (NYSE: CM) poll, conducted by Nielsen, finds that 57 per cent of Canadians are opting to lock in their monthly mortgage payments at today's historically low interest rates. That's up sharply from 48 per cent in 2014 and just 39 per cent in 2011.

Highlights of the poll include:

  • 57 per cent of Canadians would choose a fixed-rate mortgage if they were to acquire, refinance or renew a mortgage today
  • 30 per cent would pick a variable-rate mortgage
  • 11 per cent were undecided between fixed and variable, down from 19 per cent in 2014 and 25 per cent in 2011
  • 44 per cent expect higher mortgage rates next year, down from 47 per cent last year and 61 per cent in 2011
    • 42 per cent expect rates to stay the same in the next 12 months
    • 9 per cent believe rates will be lower in the next 12 months

"The poll results confirm what many of our clients are telling us, that they don't expect rates to go any lower and, in today's housing market, they want the comfort and security of knowing exactly what their mortgage payments will be for the next  four or five years," says Barry Gollom, Vice President at CIBC. "With the high cost of housing, there is definitely a strong case to be made for the predictability and financial peace-of-mind that a fixed-rate mortgage can provide."

Choosing the right mortgage

As a growing number of Canadians see fixed-rate mortgages as the best choice for them, Canadians are more decisive about the type of mortgage they would choose today. Only 11 per cent are undecided in 2015, compared to 25 per cent in 2011.

Meanwhile, the number of Canadians selecting variable-rate mortgages has held steady around 30 per cent over the last five years.

Whether buying, refinancing or renewing a mortgage, Canadians need to think beyond rates when making a decision on a mortgage.

"While rates tend to factor heavily into your decision whether to go fixed or variable, it's extremely important to make the decision based on your own financial situation and how well you're able to juggle making your monthly payment, paying household expenses and saving for your retirement or your children's education," says Mr. Gollom. "There are multiple factors that you should consider with your financial advisor. You want to be able to sleep at night and not worry that you won't be able to make your monthly payments."

Today's low-rate environment is an opportunity

Today's low-rate environment is an opportunity for first-time homebuyers or those looking to refinance, says Mr. Gollom.

"Homeowners have a rare chance to lock in at historically low rates," he says. "Many people may also be able to use this as an opportunity to make extra payments over that time so that they can pay off their mortgage sooner."

KEY POLL FINDINGS

Percentage of Canadians who would choose a fixed rate mortgage today, by region:

  2015 2014 2013 2012 2011
National  57% 48% 45% 50% 39%
Atlantic Canada 59% 50% 37% 63% 43%
Quebec 58% 48% 45% 51% 45%
Ontario 55% 48% 41% 49% 35%
Manitoba
and Saskatchewan
55% 47% 64% 46% 33%
Alberta 58% 42% 47% 49% 36%
British Columbia 58% 51% 49% 48% 38%

Percentage of Canadians who would choose a variable mortgage:

  2015 2014 2013 2012 2011
National  30% 31% 26% 32% 32%

Percentage of Canadians undecided about choosing a fixed or variable rate mortgage:

  2015 2014 2013 2012 2011
National  11% 19% 25% 16% 25%

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

  2015 2014 2013 2012 2011
National  44% 47% 38% 44% 61%
Atlantic Canada 51% 44% 42% 56% 64%
Quebec 36% 32% 33% 39% 54%
Ontario 51% 51% 39% 44% 66%
Manitoba and Saskatchewan 53% 49% 46% 48% 54%
Alberta 40% 56% 38% 50% 57%
British Columbia 35% 56% 40% 38% 63%

Percentage of Canadians who believe mortgage rates will be higher 12 months from now, by age:

  2015 2014 2013 2012 2011
National 44% 47% 38% 44% 61%
18-24 53% 49% 41% 50% 65%
25-34 46% 49% 41% 48% 60%
35-44 45% 55% 35% 40% 60%
45-54 40% 43% 36% 42% 63%
55-64 34% 42% 40% 47% 60%
65+ 49% 42% 37% 42% 57%

Each week, Nielsen Consumer Insights interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in a sample of 1,015 Canadians between March 5-8, 2015. A sample of this size has a margin of error of +/-3.1%, 19 times out of 20. Some sample sizes for regional and age groups under Key Findings are smaller than typically reported and provided only as reference data.

About CIBC

CIBC is a leading Canadian-based global financial institution with 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC on our corporate website at www.cibc.com/ca/media-centre/.

SOURCE CIBC

For further information:

Caroline Van Hasselt, Director, External Communications, 416-784-6699 or  caroline.vanhasselt@cibc.com


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