Are you budgeting for an interest rate hike?

According to a Canada Mortgage and Housing Corp. survey, Canadians are ready for a hike in interest rates and are budgeting accordingly.

The Crown corporation says 80% of Canadians follow a household budget and, when calculating that budget, 71% considered the impact higher mortgage rates would have on their finances.

“We didn’t ask the 20% what they did,” says Pierre Serré, Vice President, Insurance Product and Business Development, about Canadians without a budget and perhaps unready for a coming interest rate hike.
 
But of the group budgeting, another 69% have prepared for the impact of a loss of income and 79% have set themselves up for rising expenses. The survey also found 81% of respondents have set aside some money in their budget for additional savings.

Canadians are also trying to pay down their mortgages as fast they can with 75% of respondents saying it was important to pay off the debt as soon as possible. To that end, 39% say they set their mortgage payments higher than the minimum required while 20% have made a lump-sum payment since taking out their mortgage.

Not surprisingly, the survey found the Internet continues to be an important tool of consumers with 65% saying they searched online for a home on the web. Of those using the Internet, 86% used it to look at interest rates, 76% for mortgage options and 69% for mortgage calculator.

Even those using the Internet to buy a home still need to print out their information with 56% reporting doing that. “One of things that surprised me is they love to print stuff,” said Mr. Serré. “If you are printing stuff it means you must be putting together some stuff to help you manage your big decision.”

On average Canadians are taking about 11 months to plan the purchase of a home with 88% indicating they had a good idea of what mortgage they could afford before they purchased.

Source: Garry Marr, Financial Post