More than one-quarter of Canadians would opt for a longer mortgage term of seven to 10 years as opposed to the standard five-year mortgage, according to a new poll by Toronto-based CIBC.
Twenty-seven per cent of respondents think they would benefit from a having a fixed rate for a longer period of time. As well, 62% of respondents believe it will be at least 10 years before they are mortgage-free, making a longer-term fixed-rate mortgage appealing.
Almost half of respondents, at 47%, would stick with a medium-term mortgage of three to five years if they were to acquire, refinance or renew a mortgage today. And 19% would choose a shorter term of one to two years.
“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. “With more than one in four Canadians now saying they would choose a longer term of seven to 10 years, we may be seeing the start of a shift to longer terms.”
While a longer-term mortgage may not be right for everyone, 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,” he explains. “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.”
The poll was conducted for CIBC by Nielsen Consumer Insights, through a national telephone omnibus survey. A sample of 1,020 Canadians were surveyed between March 5 and 8. A sample of this size has a margin of error of plus or minus 3.1%, 19 times out of 20.