A broad majority of Canadians (72%) expect a rise in interest rates over the next 12 months – but just a little over half (54%) would opt for a fixed rate mortgage if they were to sign papers today, according to a new CIBC poll.
The results stand in contrast to the current composition of mortgages among homeowners polled, as 77% of them have a fixed rate mortgage.
Some 19% of Canadians would select a variable rate mortgage, while over a quarter (26%) are undecided about which type they would choose, However 83% of the respondents said they prefer “predictability and stability over risk” when it comes to their finances.
“Most Canadians believe a fixed mortgage is the way to go – especially those in the early days of paying down their mortgage or juggling household expenses,” said Tracy Best, CIBC senior vice President, mobile advice, said.
“Conversely, for those considering a variable mortgage, they may benefit from a lower rate initially but also need to be comfortable that rates may change, potentially several times, over the course of the mortgage. If rates go up, they need to ask themselves how that might impact their lifestyle and financial health,” she added.
Further data showed Canadian homeowners on average are still carrying about $170,000 on their mortgage. That average balance jumps to $252,000 among higher income earners making more than $100,000 a year.
