Canadians Expect to Pay an Average of $60,000 in Interest Over the Life of Their Mortgage

TORONTO, ONTARIO -- (Marketwired) -- 06/15/15 -- According to a BMO poll released today, Canadians estimate they will pay approximately $60,000 in interest over the life of their mortgage, with those on the west coast expecting to pay significantly more before they become mortgage free.

The poll, conducted by Pollara, revealed:

--  While the average amount Canadians expect to pay in mortgage interest is
    $57,938, the figure rises to its highest in Canada for residents in BC
    at $95,891. Those in Atlantic Canada expect to pay the least of any
    region at $35,454
--  Additionally, Canadians expect an increase in interest rates over the
    next five years (60 per cent), with 48 per cent expecting a small
    increase and 12 per cent a large increase
--  Most Canadian mortgage holders (67 per cent) currently hold a fixed rate
    mortgage, sheltering them against any potential upswings

"It's quite telling of the extended low-rate environment that a sizeable percentage of respondents do not expect interest rates to go up in the next five years," said Sal Guatieri, Senior Economist, BMO Capital Markets. "Hopefully, many have not been lulled into thinking that rates will never go up, as they could be tempted into taking on too much debt."

Mr. Guatieri also noted that it's not surprising that British Columbians are paying the most mortgage interest, as house prices in that province are the highest in the country. The average was $623,000 in April, compared with $437,000 nationwide and $456,000 in Ontario.

"In any interest rate environment, it's important that Canadians stress-test their mortgage against a higher rate to ensure they can afford it over the long term," said Martin Nel, Vice President of Personal Lending & Investment Products, BMO Bank of Montreal.

Mr. Nel added that the BMO Smart Fixed Mortgage with a posted rate of 2.74 per cent can help home buyers save thousands in interest payments and become mortgage-free faster.

Average Age of Mortgage Freedom Inches Higher

The poll also revealed that on average, Canadians expect to become mortgage free by the age of 59 - up from 58 in the last two years. Furthermore, one third (31 per cent) expect still to be making mortgage payments on their 65th birthday.

"Considering a shorter amortization of 25 years or less can help Canadians save thousands of dollars in interest rate costs over the life of the mortgage; this improves long-term affordability, while ensuring Canadians pay down their mortgage faster and begin building equity in their home sooner," said Mr. Nel.

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                TOTAL INTEREST EXPECTED TO BE PAID BY REGION
----------------------------------------------------------------------------
  ATLANTIC      QUEBEC      ONTARIO      PRAIRIES     ALBERTA        BC
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   $35,454     $41,915      $49,991      $68,238      $85,404      $95,891
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----------------------------------------------------------------------------
            AVERAGE AGE EXPECTED TO BE 'MORTGAGE FREE' BY REGION
----------------------------------------------------------------------------
  ATLANTIC      QUEBEC      ONTARIO      PRAIRIES     ALBERTA        BC
----------------------------------------------------------------------------
     58           61           57           57           58          61
----------------------------------------------------------------------------

For more information on the BMO Smart Fixed Mortgage or for help and advice on the home buying process, please click here.

BMO offers the following advice:

Think carefully about fixed vs. variable: While variable rate mortgages have been a winning strategy over the long term, fixed rate mortgages (currently near historic lows) come with the peace of mind of being insulated against rate increases.

Stress-test your mortgage: Gauging the stability of your mortgage by stress testing it against a higher interest rate can help establish a plan to ensure long term affordability.

Understand every step of the home buying journey: The BMO Home Buyers Guide provides advice and information designed to guide buyers through the process of financing, choosing and purchasing a new home. For more information, visit www.bmo.com/mortgages.

Survey results cited in this report are from online interviews with a random sample of 2,007 Canadians 18 years of age and over, conducted between February 24th and March 5th, 2015. As a guideline, a probability sample of this size would yield results accurate to +/- 2.2%, 19 times out of 20. Results have been weighted using the latest census data to be representative of all adult Canadians.

About BMO Financial Group

Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of approximately $633 billion as of April 30, 2015, and more than 47,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.

Contacts:
Media Contacts:
Kathleen Savage, Toronto
(416) 867-3996
[email protected]

Valerie Doucet, Montreal
(514) 877-8224
[email protected]

Internet: www.bmo.com
Twitter: @BMOmedia

Source: BMO Financial Group and BMO Bank of Montreal

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