TORONTO, ONTARIO — (Marketwire) — 03/28/12 — A new report released today by BMO Bank of Montreal revealed that the majority of Canadian households are -stress-tested- against the possibility of rising interest rates. However, 43 per cent of Canadians say that a two per cent hike in interest rates would leave their ability to afford their home on unsure footing.
The Leger Marketing report was conducted before the recent interest rate outlook from the Bank of Canada. According to BMO Economics, interest rates are expected to increase beginning next year.
The survey revealed:
“Stretching the limits of your budget by choosing the maximum amortization period and a minimum down payment leaves you little wiggle room to deal with an unexpected financial challenge,” said Katie Archdekin, Head of Mortgage Products, BMO Bank of Montreal. “At BMO, we-ve been encouraging homebuyers to take a 25-year amortization and stress-test their mortgage with a higher interest rate to ensure they can afford it over the long-term.”
Currently, BMO offers a new 10-year mortgage at a great introductory rate of 3.99 per cent with a maximum 25-year amortization. It is modeled after the popular 5-year maximum 25-year amortization mortgage at 2.99 per cent.
Today, March 28, marks the last day both limited time rates offers are available to new and existing customers. Ms. Archdekin advised those looking to buy a home in the next three months to visit a local branch and get pre-approved today for 90 days to guarantee these great rates as they search for a home.
According to Doug Porter, Deputy Chief Economist, BMO Capital Markets, financial stability for Canadian homeowners in the coming years will be supported by locking-in and opting for shortened amortization periods.
“Our interest rate outlook now projects that fixed mortgage rates will trump variable. While the decision ultimately depends on the individual, the low rate combined with a shorter 25-year amortization will significantly strengthen household financial stability,” said Mr. Porter.
Regionally, the report revealed:
BMO offers the following tips for homebuyers
The survey was completed on-line from February 21 to 23, 2012, using Leger Marketing-s online panel, LegerWeb. A sample of 1500 Canadians, 18+, were surveyed.
A probability sample of the same size would yield a margin of error of +/-2.5%, 19 times out of 20.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
Contacts:
Media Contacts:
Matthew Duffin, Toronto
(416) 867-3996
Sarah Bensadoun, Montreal
(514) 877-8224
Laurie Grant, Vancouver
(604) 665-7596
Web:
Twitter: @BMOmedia