Oct 28, 2010, Majority of Alberta boomers mortgage-free

Alberta’s boomers are the most likely in the country to have paid off their mortgage in full.

The TD Canada Trust Boomer Buyers Report released Thursday said nearly six-in-10 Alberta boomers have paid off their mortgage versus 44 per cent nationally.

But the poll also said one in 10 Albertans have paid off less than 25 per cent of their mortgage.

“Alberta has been a good place to come and work – a good place in terms of opportunity,” said Jessy Bilodeau, mobile mortgage specialist with TD Canada Trust in Calgary. “We’ve seen specifically in Calgary over the last few years a lot of head offices come here. There has been potential for Albertans to earn some good incomes and then in turn put that down towards their mortgage.”

For those Alberta boomers who have paid off less than 25 per cent of their mortgage, Bilodeau said there could be many reasons for that.

One is when the homeowner purchased a residential property.

“You bought high and market conditions changed so you didn’t get a lot of equity resulting from that purchase,” said Bilodeau. “For others it’s life situations. A lot of people have re-financed their mortgage once or more times throughout a 25-year period. Not everyone just stays with the original plan that they started off with to get it paid off in x number of years.”

Lai Sing Louie, regional economist in Calgary for Canada Mortgage and Housing Corp., said boomers are in the age group where their salaries are at their peak or rising to their peak and they are moving into retirement.

“With that, average weekly wages in Alberta are the highest of any province in Canada,” said Louie.

He said there are two philosophies with people who have mortgages.

One group will do anything they can to pay off their mortgage. Their primary financial focus is to try to get the mortgage down as quickly as possible and minimize their interest payments over the period of their mortgage, said Louie.

“There’s another camp where people look at their houses and not just want to pay it off but there’s lifestyle considerations,” he said. “People will spend more, consume a little bit more now, or use some of that money that they could have put down to pay off their mortgage to invest in other assets.”

Boomers in Alberta are also the most likely in the country to plan to spend their retirement at their vacation home – twice as likely as other Canadian boomers (nine per cent versus five per cent nationally), said the TD Canada Trust report.

The poll also found that the majority of Albertans would consider purchasing a retirement property south of the border – 22 per cent say opportunities created by the depressed real estate market have sparked their interest while another 25 per cent say they were already considering real estate opportunities in the United States.

“Obviously financially if you’ve been able to get your mortgage paid down or almost paid off then that gives you access to money or different things that you could use to then purchase a vacation home outside of the province,” said Bilodeau.

By Mario Toneguzzi, Calgary Herald