More retiring Canadians expect to continue making mortgage payments

Retiring mortgage-free may be a reality for a shrinking number of Canadians.

A recent Leger survey finds that an increasing number of homeowners expect to carry repayments into their “golden years.”

Royal LePage, which commissioned the report, calls it a new real estate reality shaping up for retirees, as almost three-in-10 Canadians who plan to retire within the next two years expect to exit the workforce with mortgage debt.

The real estate service says that trend is accelerating, citing Statistics Canada data suggesting there has been a doubling of senior households with mortgage debt compared to 2016.

“The benefits of entering retirement as a homeowner with a paid-off mortgage are clear: more disposable income, insulation from interest rate changes, and even the emotional security that comes from knowing you’ll always have a place to live. In the era of rotary phones and station wagons, burning your mortgage was the economic finish line. Today’s retiree reality is much more nuanced,” said Phil Soper, president and CEO of Royal LePage.

“Home price appreciation over the past 25 years has been a double-edged sword for today’s retirees,” said Soper. “On one hand, it has delivered unprecedented financial gains. On the other hand, this generation is far more likely to have carried mortgage balances that would have been unimaginable to their parents or grandparents. Our research confirms they are also much more likely to have provided financial assistance to their children to assist in their home ownership dreams.”

But Soper believes that while previous generations may have viewed mortgage-free retirement as the only option, today’s retirees tend to be more open-minded, and previous data from Royal LePage suggests Canadians are entering the housing market later, increasing the odds of future generations of retirees carrying a mortgage further into retirement.

“Traditional employment income may have dried up, but many are still comfortably managing their expenses and servicing mortgage payments, with income from investments, part-time work, or a working spouse.”

The survey also suggests close to half of Canadian homeowners approaching retirement plan to downsize within two years of ending full-time employment.