Some Canadians think now is the time to lock into rarely used 7 or 10 year terms given today's record low rates
TORONTO, May 14, 2015 /CNW/ - A new poll from CIBC (TSX: CM) (NYSE: CM) conducted by Nielsen finds that the majority of Canadians (74 per cent) would opt for a medium-term or longer-term mortgage if they were to acquire, refinance or renew a mortgage today, including 27 per cent who think now is the time to look beyond the traditional 5-year fixed mortgage for a term of up to 10 years.
Highlights of the poll include:
- 47 per cent would choose a medium-term mortgage (three or five years) if they were to acquire, refinance or renew a mortgage today
- 27 per cent would opt for a longer term (seven or 10 years)
- 19 per cent would go with a shorter term (one or two years)
- 62 per cent of Canadians with a mortgage believe it will be at least 10 years before they are mortgage-free, making it possible to choose a longer term such as a 10-year fixed rate
"Canadians are recognizing that today's historically low rates won't last forever and some are looking for ways to bring predictability to their finances over the long term," says Barry Gollom, Vice President, Mortgages and Lending at CIBC. "Most Canadians tend to opt for a fixed rate over 5 years when choosing a mortgage today. With more than 1 in 4 Canadians now saying they would choose a longer term of 7 or 10 years, we may be seeing the start of a shift to longer terms."
The benefits of a longer-term mortgage
While a longer term mortgage may not be right for everyone, Mr. Gollom says that locking in to a medium or longer-term fixed-rate mortgage can reduce the stress that can come with following interest rates.
"If interest rates rise in the next year or two, homeowners with shorter-term mortgages or variable-rate mortgages could see their payments move higher," Mr. Gollom says. "Having a medium or longer term fixed rate can act as a measure of stability and protection - especially for those who have recently bought their first home."
This shift to longer-term, fixed-rate mortgages signals growing interest by Canadians to gain greater control and certainty over their largest financial obligation. With a consistent and predictable mortgage payment at today's low rates guaranteed for many years, Canadians may have the opportunity to pay down their mortgage faster and minimize interest costs, which will help to keep them on track for their broader financial goals.
"Finding an expert who can crunch the numbers on a variety of mortgage options while factoring in your other debts, your savings goals and your personal risk tolerance is an extremely important part of the evaluation process," says Mr. Gollom.
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 1,020 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.
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/.
Caroline Van Hasselt, Director, External Communications, 416-784-6699 or email@example.com