Canadians expecting higher mortgage costs in 2010: RBC poll
Three-quarters of homeowners believe preparation is key
TORONTO, March 24, 2010 According to RBC's
17th Annual Homeownership Survey, 64 per cent of Canadians
are expecting mortgage rates to be higher over the next year,
with roughly the same number of mortgage holders (66 per cent)
concerned about higher rates.
"The best advice for concerned homeowners is to review
their mortgage holdings with a financial advisor regularly,
just as they would an investment portfolio, to position themselves
for any upcoming changes," said Marcia Moffat, RBC's
head of home equity financing.
Three-quarters (73 per cent) of homeowners feel strongly
that homebuyers need to think ahead to ensure they will still
be able to make their mortgage payment if rates rise.
Encouragingly, Canadians are taking action with six-in-ten
mortgage holders saying they have taken advantage of current
low interest rates to pay more principal. Eighteen per cent
of home owners say they have made a lump sum payment on their
mortgage and 16 per cent have doubled up their payment to
reduce their mortgage principal.
"Homeowners that are uneasy about future rate increases
may want to consider one of the many options available to
decrease their mortgage costs," said Moffat.
While the majority of mortgage holders (84 per cent) believe
they are doing an excellent or good job of paying down their
mortgage, half of homeowners (49 per cent) say their mortgage
is larger that they thought it would be at this stage in their
In addition to seeking customized advice from a financial
advisor, Moffat provides the following tips for Canadian homeowners:
1. Look into your prepayment options. Many closed
mortgages allow you to double up a payment or pay up to 10
per cent of your mortgage annually. Prepayments are applied
directly to the principal balance, helping to save thousands
of dollars in interest costs over the life of the mortgage.
2. Pay down higher cost debt. If you have access to
a home equity line, consider using the line of credit to pay
down higher unsecured debt to save on interest costs. For
example, if you regularly carry a balance on a credit card,
transferring the balance to your home equity line with a lower
interest rate can help you lower your overall borrowing costs.
3. Have a strategy to pay off your home equity line of
credit. Rather than making interest payments only, set
up a regular payment that includes paying down your line of
credit. Alternatively, consider converting your home equity
line of credit into a fixed or variable rate mortgage. Even
if you are waiting to see where rates are headed, by choosing
a variable mortgage you are able to retain a low prime-based
rate and you are paying down both principal and interest on
the loan. Also, many variable rate mortgages can be converted
to a fixed rate mortgage at any time.
Canadians can visit the new RBC Advice Centre www.rbcadvicecentre.com
to stress test their mortgage for potential rate increases.
The RBC Advice Centre is an online resource that gives Canadians
access to advice about all aspects of their homeownership
goals - whether they are buying their first home, planning
their next move, renovating or managing their current home
financing. Advice videos are updated regularly to reflect
current housing trends and to answer the questions that are
top of mind with Canadian homeowners. Interactive tools and
calculators provide customized information covering all facets
of homeownership. With the guidance of RBC mortgage specialists,
Canadians have access to free, no-obligation professional
advice and personalized one-on-one service about RBC mortgage
products and services.
These are some of the findings of the RBC's 17th Annual Homeownership
poll conducted by Ipsos Reid between January 8 to 13, 2010.
The annual online survey tracks Canadians attitudes and behaviours
around home buying and home ownership. It is based on a randomly
selected representative sample of 2,047 adult Canadians that
was statistically weighted by region, age and sex composition
according to the 2006 Census data. The results are considered
accurate to within ±2.2 percentage points, 19 times
out of 20, of what they would have been had the entire adult
Canadian population been polled. The margin of error will
be larger within regions and for other sub-groupings of the
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Jacqui van der Jagt, RBC, (416) 974-1756
Matt Gierasimczuk, Media Relations, (416) 974-2124