Do Your Golden Years Include Mortgage Payments?

Seniors mortgage The prospect of still having a mortgage to pay off past age 65 is a growing reality for Canadian homeowners, according to a new survey.

RBC’s latest Housing Snapshot poll found that over half of Canadians expect to be servicing their mortgage after the age of 55, while 27% foresee carrying mortgage debt beyond age 65.

Perhaps most startling, a full one-third of respondents aged 55 or older said they still have 16 or more years left on their mortgage term. It’s safe to assume many of those individuals won’t be celebrating their retirement party at 65.

Homeowners are not without good intentions, however. The poll found 72% of Canadians with mortgages “expect” to be mortgage-free before the age of 65.

Here are some other notable stats from the report:

  • An overwhelming majority of Canadians (96%) say a low interest rate is the most important feature when choosing a mortgage
  • Flexible payment options (88%) is the second most important feature. But only 50% say flexible payment options are “very important” vs. 87% who ranked low rates as being “very important”
  • Convinced that interest rates will remain stable over the next year, Canadians have been increasingly attracted to variable-rate mortgages. As of October, 29% indicated they were interested in a variable, compared to 19% in Q1 of this year (that number may drop with variable discounts shrinking)
  • Fixed rate mortgages have also seen heightened appeal among consumers. 46% indicated interest in fixed mortgages, compared to 40% in Q1 of this year.
  • Curiously, interest in using a hybrid mortgage (one that’s part fixed and part variable) has “declined significantly” says RBC (25%, compared to 41% in Q1 of this year).
  • On an encouraging note, the number of mortgage-free Canadian homeowners increased slightly in the fourth quarter, to 41% from 38% in the first quarter. This is the highest level since 2006.
  • A majority of Canadians (55%) expect interest rates to remain the same or decrease over the next six to 12 months. Only 26% think rates are likely to rise more than 1% during that same period.

“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,” said Claude DeMone, director of Strategy for Home Equity Financing at RBC.

It’s hard to argue with that because we all know how fast rates can defy expectations.


Steve Huebl, CMT

  1. as long as the rates stay reasonably low, they should be good.
    No mortgage holder needs rates over 3-4% anymore … Only greedy investors do, but their days should be numbered by the new world order ;) regulations.

  2. So one third of Canadians expect to still have a mortgage at retirement. Those are the people that have benefitted most from the extraordinary runup in house values in most parts of Canada in the last decade. Can you imagine how the picture will look 10 years from now without that boost?

  3. How can people who are turning 65 still have a mortgage? While I have no doubt that today’s generation of families would be saddled with debt for many many years, especially housing debt as prices continue to surge in large cities and credit cards/car loans/student loans, etc., the baby boomers were fortunate enough to enjoy far more reasonable housing prices in the 70s, 80s, and 90s. Something is definitely amiss here, because of these people are still in debt, I don’t want to know how today’s young generation will fare when they reach retirement, and by that time the system would already be under stress once the majority of boomers exit the workforce.

  4. The thought of thousands of retiree households using their retirement savings and (especially) pensions to pay their housing debt is more than a little troublesome, especially given the long-term uncertainty around retirement savings and pensions.

  5. Look at it’s brightest side : Interest rates can’t go to much higher when many are on the brink of default. So ultimately – it’s not that bad of a story. Rates should stay low for a while.

  6. It is not the BoC’s job to save people from their own debt. The number one priority is inflation control and if inflation increases they will not stop rate increases to protect debtors.
    However with the economy as it is, high inflation is pretty unlikely anyway so I don’t think it’s a choice they will face.

  7. It’s all interconnected I believe. Government have all the power to control inflation (as prices of goods that affect it most).
    Their job is to keep things on balance.

  8. Maybe the Chinese have figured it out. Hybrid Capitalism: strict government control of the currency and government owned companies, with some small owner enterprise. Nonetheless, That’s why you should never consider your primary home an investment. Western democracies need to ensure the affordability of homes. A cap should be set for how much homes can be worth.

  9. 2 years ago (30 years old) I was in a negative net worth position, if everything continues in this bear market I will be debt free when I turn 35. Same house, bought new car and truck this year (paid cash) and will have my avg home in Calgary paid off, no credit card debt, no LOC’s debt free.
    I looked in the mirror and applied myself for myself and my wife and my two children. Our choices have been tough, but I went from grossing 86k in 2008 to grossing 256k (projected through dec 2011) and my wife and I are working through the tough issues that have come up because we see the end goal. In 2008 we just purchased a new home, owed money on vehicles, credit cards and a monster LOC. Currently we owe on the LOC and the home. We are in a positive net worth position. We have a variable mortgage with a rate of P-0.85 but are currently making payments as if the rate was 6.5%, and we are making lump sump payments on the LOC.
    Hope for government intervention and or BOC intervention is misplaced. Take some initiative, get out of your lazyboy and apply yourself. It may be very uncomfortable, but the longer you sit around and wait the more opportunity there is for people like me who are taking advantage of the laziness of this country.

  10. I can say one thing here :
    Be careful … as you know by experience things in life can change very fast … in either direction :)
    So less talking with certainty about the future as no one knows what’s coming for sure.

  11. Fair enough “Observer”, however this is a bear market and I am seeing enormous opportunity now meaning I have not met the ceiling in this grim economy. This may sound “glass-is-half-full” but there is opportunity out there.

  12. May I ask in what line of work you are thriving in in this grim economy?
    ’cause whatever it is, I’d like a piece of that!

  13. One alternative to making mortgage payments after retirement is to make rent payments; would that be any better? Obviously, a free-and-clear home is most desirable but if that’s not possible for whatever reason …

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