TORONTO (Reuters) - A third of older Canadians will be paying off their homes until their 70s or even later, well past the age they hope to retire, according to a poll by Royal Bank of Canada released on Thursday.
The survey by Canada’s largest lender showed that while nearly 72 percent of Canadians hope to mortgage-free by the time they are 65 years old, 33 percent of those over the age of 55 still have 16 years or more on their mortgage term.
Data out in September showed Canadians continued to pile on more debt in the second quarter, due in part to ultra-low interest rates.
The ratio of household credit market debt - which includes mortgages, consumer credit and loans - to disposable income rose to 149 percent from 147 percent in the previous quarter, the highest level since the agency began compiling the data in 1990.
The RBC online survey conducted by Ipsos Reid between October 6-14 found that the majority of those polled expect interest rates to stay on hold in the next six to 12 months.
It said interest in fixed- or variable-rate mortgages has climbed since the first quarter, while interest in hybrid mortgages had declined.
“Though many Canadians expect interest rates to stay the same over the next year, they should still keep in mind that it’s important to build some wiggle room into your budget to prepare for any extra costs or future rate increases,” Claude DeMone, RBC’s director of strategy for home equity financing, said in a statement.
Bank of Canada Governor Mark Carney has repeatedly warned Canadians not to take extremely low interest rates for granted in planning their finances.
The central bank’s key interest rate is currently at 1 percent, and most of Canada’s primary dealers - the institutions that deal directly with the Bank of Canada as it carries out monetary policy - don’t expect a hike until next year or 2013.
Reporting by Claire Sibonney; Editing by Jeffrey Hodgson