A survey conducted by CIBC/Harris Decima suggests Canadians are split on what this might mean for their mortgages.

When asked what type of mortgage they would choose if they had to make the choice today, 39% of respondents said fixed, while 32% said variable. Twenty-five percent were undecided.

The majority (61%) said they believed rates will be higher one year from now, while 24% expect no change.

“The divergent opinions on whether to go fixed or variable underscores what our advisors see everyday in their meetings with clients – choosing the right mortgage depends on your personal financial situation, and there’s no single answer for everyone,” commented Colette Delaney, senior vice-president, mortgages, lending and insurance, CIBC Retail Markets.

She went on to recommend that financial planning should come first, with mortgage decisions based on personal financial goals.

“Your mortgage is a major part of your overall financial plan, and your decisions should be based on how your mortgage fits with your long term financial goals, not on short term rate fluctuations,” she said.

The survey found that younger Canadians (aged 25-34) were less likely to choose variable mortgages (27%), while respondents between 45 and 54 years of age were more willing to accept the interest rate volatility (42%).

“For most people, your mortgage is a long term proposition, so your strategy should look beyond your first term,” says Delaney. “You may choose to start with a fixed mortgage when you buy your first home, then transition to a variable mortgage in later terms when you have improved your financial situation and paid down some of the principal.”

The question of timing the Bank of Canada’s future hikes is a hot topic among retail bank economists. Doug Porter, deputy chief economist, BMO Capital Markets agrees that the mortgage decision has become increasingly complex as pressure builds for higher rates down the road.

“Although inflation hasn’t been a significant problem since 1991, there is a risk of a flare-up due to rising gasoline prices,” said Porter. “The Bank of Canada has signalled it may increase interest rates later this year, driving variable mortgage rates higher, but leaving fixed rates relatively unscathed.”