All Canadians want to pay off their mortgages faster. But just how fast do they think they’ll be able to do it, and is that view realistic? According to an RBC Housing Snapshot Poll released last week, Canadians think they’ll be mortgage-free much sooner than they may actually be.
The poll shows that 72% of Canadians hope to have their first or second mortgage paid off by the time they reach the age of 65 and are looking towards retirement. However, the poll also shows that 33% of Canadians who are now 55 and older, still have 16 years or more left on their mortgages. Do the quick math and you can see that that puts many people within this group still paying off a mortgage or a HELOC when they are the age of 71 or older – equaling only half of those that think they will have it paid off by that time.
Younger Canadians, those in the 18 – 34 age category, hold even more optimism for when they will have their mortgage paid off. 12% from this group think that they will have their mortgage paid off by the time they are 35 and 26% think that they will be mortgage-free by the time they reach 45. This could be concerning, as it’s this age group that is most likely to be hit hardest should interest rates rise – simply because they are likely to be the age group with the largest amounts still due on their loans, and that total will go up with every rate hike. However, this age group also isn’t under delusions about what those interest rates will be doing – 34% of them agree that a steep hike is coming within the next year.
While a quick look at the stats might have you thinking that Canadians are “pie in the sky” kind of thinkers, our positive view of when we’ll be mortgage-free might actually be based on the fact that we’ve been showing we’re trying to pay off our mortgages faster, especially at a time when low interest rates make that easier to do than it has been in the past 50 years. The poll also shows that this past year, Canadians have been better than ever at paying off their mortgage. 41% of Canadians had paid off their mortgage entirely in the fourth quarter of last year, and that was up by the 38% that were mortgage-free in the first quarter. And, maybe even more important, that’s the highest number we’ve had of mortgage-free homeowners since 2006.
Claude DeMone, director of strategy for home equity financing for RBC said when the poll was released, “Canadians want to be mortgage-free as they approach retirement age and beyond, but the reality is that it takes prudent planning and the right advice to stay on track.”
