Canadian are Slowing their Mortgage Pre-payments

A recent poll done for CIBC found that Canadians are paying down their mortgages more slowly this year than last year.

Is the continued low interest rate environment, making Canadians more complacent about paying down debt?  It should provide motivation for them to take advantage of the situation which will obviously not last forever.

The poll found that 55% of survey respondents report that they are taking some action to pay down their mortgages faster. This is down significantly from last year’s 68%. The average age at which Canadians expect to be mortgage free has also increased slightly – from 57 a year ago to 58 this year.  This could mean that it will take a rising interest rate environment to motivate repayment of debt.

Breaking down the survey results a little more:

The survey found that 32% of respondents report that they have accelerated their payment frequency, compared with 42% last year.
Those who have increased their payment amounts has dropped from 30% a year ago to 28% this year.
The percentage of those making lump sum payments has actually increased from 15% last year to 18% this year.
The significant drop in the percentage of those taking any of these actions (from 68% to 55%) is the most concerning data point in this year’s survey.

Regionally, there were a couple of interesting differences: In B.C., which is skewed by the very expensive Vancouver market, the average expected age to be mortgage free is 66, compared to the national average of 58. Respondents in Ontario reported the highest percentage of those taking one or more mortgage pre-payment actions at 61% while in B.C., it drops to 47%.

The survey was conducted between May 21 and May 22 and included more than 1,500 respondents. The margin of error is +/- 2.53% 19 times out of 20.

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