A recent CIBC survey showing the average homeowner expects to take an extra two years to pay off mortgage debt is the direct result of unfettered access for unsecured credit, say brokers, renewing calls for government action.
“Everybody wants everything today,” says Joe Walsh, a mortgage broker with DLC’s Bedrock Financial Group. “I don’t see the government doing a lot to stop credit card debt, what with the loose approvals and people walking around with five or six cards. It’s a different world now, and credit cards are too powerful a money maker for the banks.”
The survey suggests half of Canadians feel that their debt from credit cards and lines of credit were hindering their ability to pay down their mortgages – expecting to be mortgage free not until they are age 57.
“Our parents paid off their mortgage when they turned 55, but then again they weren’t buying bigger and bigger homes every five years. They would keep their starter homes,” says Walsh. “The first thing I saw as a mortgage broker today is people telling me ‘I need a four bedroom home for my two kids.’”
Only 11 per cent of those surveyed who said they have taken on additional debt since buying a home were able to make an extra payment on their mortgage in 2012, compared to 19 per cent who were able to make a lump-sum payment without taking on more unsecured debt.
By region, British Columbians topped out with citizens expecting to not see their mortgage paid off until age 59, followed by Manitoba and Saskatchewan at age 58.
“It’s not an easy, simple fix,” says Walsh. “The government has done what was needed to control mortgage debt through the regulations that have been introduced. But now the pendulum has swung far enough.”