CALGARY - Canadian mortgage holders seem unconcerned about higher borrowing costs.

New research by Investors Group reveals that Canadian mortgage holders may be overly confident that they can take higher borrowing costs in stride, and that mortgage payments won't be an obstacle to retirement. According to Statistics Canada, more than 4.8 million Canadian adults hold a mortgage.

In a recent poll of Canadian homeowners who have a mortgage, 35 per cent of respondents say they are not concerned about their ability to make their payments in the event of interest rate increases. And another 41 per cent of respondents said it would take a hike of three per cent or more to cause them to lose sleep.

"Canadians appear to have both feet on the ground through these ups and downs, but everyone needs to ensure their confidence is aligned with reality," said Peter Veselinovich, Vice-President, Banking and Mortgage Operations at Investors Group. "People need to plan for the impact of interest rate increases, which can affect their ability to save or enjoy retirement."

The poll also found that respondents' median outstanding mortgage balance is approximately $130,000. According to Veselinovich, for a mortgage this size with an amortization of 25 years and an interest rate of 4.5 per cent, a rate increase of three per cent would add approximately $230 to an individual's monthly payment. That amounts to an additional $70,000 in interest costs over the life of the mortgage.

Those who are newer to homeownership appear more likely to fear higher rates. If mortgage rates were to increase by two per cent or less, 29 per cent of mortgage-holders aged 18 to 34 would worry, compared to only 22 per cent overall.

According to the poll, most mortgage-holders (56 per cent) do not consider paying off their mortgage in full as an important factor in deciding when to retire. Nearly two-thirds (62 per cent) of survey respondents say they plan to carry debt into retirement or have already done so. Of this group, approximately half say that that the mortgage on their primary residence will be the main reason for the debt.

Among the mortgage-holders who are not yet retired, 23 per cent expect to have a relatively small outstanding balance of less than $25,000 when they retire.

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