Canadians Slower to Pay Off Mortgagespar Andrew Rickard | July 23 2014 11:20AM
Canadians are not paying down their mortgages in the current period of low interest rates.
A poll conducted by CIBC reveals that there has been a decrease in the number of Canadians who have accelerated repayment of their mortgages. In the same poll last year, 68% of respondents indicated that they had sped up their mortgage payments. This year, only 55% said they were doing so.
Of those who were taking steps to reduce their mortgages, 32% of those said they had increased their payment frequency (down from 42% in 2013), while 28% increased their payment amount (compared to 30% last year) and 18% made a prepayment or lump sum payment (up from 15% in 2013). The poll also found that Canadians with mortgages expect to have it paid off, on average, by age 58.
Instead of reducing debts, CIBC says Canadians are spending more on other items such as home renovations (up 30% from a year ago) and summer vacations (up 20% from last year).
"With mortgage rates remaining relatively stable and at historic lows for the last few years, some Canadians may not be as focused on paying down their mortgages as when interest rates are higher," says Barry Gollom, vice president of secured lending and product policy at CIBC.