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Guide to comparing mortgage rates in B.C.
The B.C. mortgage rates displayed on this page are provided to NerdWallet by Homewise, a licensed mortgage broker that partners with lenders across Canada.
These mortgage rates are refreshed daily, representing the latest mortgage options available from Homewise’s lender partners. The rates come directly from Homewise’s lender partners and are updated by Homewise to provide the most accurate options for you each day.
» MORE: How mortgages work in Canada
What’s a good B.C. mortgage rate?
The short answer is: the lowest possible rate for which you can qualify based on the mortgage type you want and the amount you need to borrow.
The longer answer to this question requires some historical context. According to Statistics Canada, the average conventional mortgage lending rate for loans with 5-year terms was 7.18% in 2001, 4.57% in 2011, and 3.28% in 2021.
You can see that while 5% would have been an excellent mortgage rate in 2001, relative to the average, it wouldn’t have been so great in 2021.
Although mortgage interest rates have increased in 2022, as the Bank of Canada adjusts interest rates to account for inflation, looking back over the past few decades shows that mortgage rates are still low by historical standards.
And it’s important to keep in mind that a lender’s advertised rate is only the beginning of the story. The actual mortgage rate you’re offered will be determined by your credit score and other personal financial factors.
Why it’s important to compare B.C. mortgage rates before applying
When choosing a mortgage in British Columbia, it often comes down to how much you’ll end up paying over the term of your loan.
Mortgage rates have a big impact on the total cost of your mortgage over time, so getting the lowest rate possible for your needs or circumstances is a good starting point to save money. This is especially important in B.C., where new mortgage loans are the largest in Canada on average — just over $487,000 in the fourth quarter of 2021, according to Equifax Canada data.
Mortgages are available from a wide range of lenders in B.C., including the Big Six banks, credit unions, direct mortgage companies and private lenders. Rates, fees, terms and conditions, customer service or digital features can vary widely between lenders, even for the same type of mortgage.
Choose a mortgage with a rate that seems low, but ultimately isn’t a good fit with your future plans, and you could end up paying penalties or thousands more in payments over the life of your mortgage.
When you compare today’s mortgage rates side by side, and in conjunction with other factors that may affect the total amount you’ll pay, it will help you choose a competitive rate with a lender that meets your needs.
How to compare B.C. mortgage rates across lenders
To compare B.C. mortgage rates make sure you’re making an ‘apples to apples’ comparison. If you’re weighing the rates for different types of loans against each other, you won’t get a true sense of whether a mortgage meets your needs or offers the best value.
To make sure you’re getting the best comparison, look at:
- The same type of mortgage.
- The same terms.
- The total annual percentage rate, or APR.
Additionally, you’ll want look at other factors depending on your needs, such as:
- What fees and other closing costs the lender will impose.
- Whether there are prepayment penalties (in case you want to make a lump-sum contribution, pay off your mortgage early or pay a little extra each month).
- How other customers rate the lender in terms of customer service, ease of the application process or the availability of digital tools to manage your mortgage.
- The size and reputation of the lender; do you want to work with a large traditional lender, a smaller direct lender, a mortgage broker or an alternative mortgage provider?
How are B.C. mortgage rates determined?
There are several factors that affect the mortgage rates you’ll see in Canada. These include some factors that you can control, like your financial profile, the lender you work with, and the length or type of loan you choose.
But there are also larger factors at play, which you can’t control. These include the health of the economy, inflation and the Bank of Canada’s monetary policy.
It’s important to have an understanding of how these factors play a role in determining the interest rate on your mortgage.
Bank of Canada
Movement in the Bank of Canada’s policy rate (called the overnight rate) determines the rates of variable-rate loans, including lines of credit, some credit cards and yes, variable-rate mortgages.
Canada’s larger financial institutions base their prime rates on the central bank’s overnight rate, which is the average interest rate for one-day loans between financial institutions.
When the central bank hikes interest rates in a bid to control inflation, for example, the prime rate usually follows suit, and variable rates typically go up.
Fixed-rate mortgages are linked to the government bond market and are based on the annual rate of return of bonds, also known as the yield, which are impacted by economic factors, such as inflation.
Fixed mortgage rates move with bond yields, so generally, when bond prices are low and yields are high, such as in an environment of rising inflation expectations, the rate of interest for fixed-rate mortgages will also rise.
Ultimately, however, what’s going on in the economy is only one factor that will affect your mortgage rate. Your personal financial situation — but more specifically, the risk a financial institution is taking on by lending to you — plays a large role in the actual mortgage rate you will be quoted.
Things like your credit score (which helps lenders assess your capability to repay the loan), income level, type of employment, the size, type and length of loan you choose, or even the chance that you’ll pay the mortgage off too early (called prepayment risk) are all factors that lenders will use to determine your rate.
The type of interest you choose
The rate you’ll pay will also depend on the type of mortgage interest you choose. In B.C., you can opt for:
Fixed-rate mortgages maintain the same interest rate for the entire term of your mortgage. Fixed mortgage rates tend to be higher than those of their counterparts, variable-rate mortgages. The advantage of fixed-rate mortgages for many borrowers is predictable payments over the term. Fixed-rate mortgages are offered in both closed and open mortgage terms.
Variable-rate mortgages often have lower ratesr and more flexible terms than fixed rate loans, but borrowers have to contend with the potential for rate volatility throughout the term of their mortgage. Variable-rate mortgages can work in a borrower’s favour in a falling or consistent interest rate environment, but can cost more if rates rise.
Having a variable-rate mortgage doesn’t affect the amount of principal you pay every month, but it can impact the amount of interest you have to pay on top of that amount.
For example, if a lender charges prime minus 0.5% and prime is 3.25% at the start of your mortgage, you’ll initially pay a rate of 2.75%. If the Bank of Canada raises its interest rate by 0.50% and banks raise their prime rates in turn, your rate will increase to 3.25%.
Some lenders may offer a convertibility feature, which allows borrowers to convert a variable-rate mortgage to a fixed rate at any time during the term, often for a fee.
» MORE: How to choose between fixed and variable-rate mortgages
A hybrid mortgage combines the features of both fixed and variable rates. With this model, a portion of the amount borrowed will be locked in at a fixed interest rate, while the rest will be subject to a variable rate of interest.
The mortgage term and amortization you choose
Your mortgage term and amortization period will also directly affect the amount of each payment. While mortgage terms can last up to 10 years, most Canadians choose a 5-year mortgage term.
Your mortgage term is the length of your contract with a lender. The contract outlines the frequency of your regular payments during the term, the interest rate you’ll pay and any other terms and conditions, such as prepayment penalties. In Canada, mortgage terms are generally between six months and ten years.
A mortgage’s amortization period is the number of years it is expected to take for you to pay off the entire mortgage, based on the interest rate you agreed to during the mortgage term.
Amortization periods in B.C. can be as long as 30 years, as long as your down payment is at least 20%. For down payments of less than 20%, your mortgage will carry a maximum amortization period of 25 years.
Although a longer amortization period may mean lower payments, it will take you longer to pay off the loan, resulting in more interest payments over the long term.
Types of mortgage terms
Short term. In general, a mortgage with a term of five years or less is considered a short-term mortgage. These loans often have lower rates than long-term mortgages because borrowers aren’t locking in for as long.
Often, borrowers seeking shorter terms are banking on interest rates moving lower in the near future, in time for them to renew their term, or are planning to repay the mortgage within a short window. Shorter terms are offered at both fixed and variable rates.
Long term. A long-term mortgage is one with a term of more than five years. Longer mortgage terms typically come with higher rates and are often offered at fixed, rather than variable, interest rates. Sixty-six percent of all mortgage holders have a fixed rate, according to the March 2022 State of the Housing Market report by Mortgage Professionals Canada.
Closed/open. Closed mortgages can offer lower interest rates, but come with conditions and charges related to prepayment, transferring the mortgage to another lender or paying off the balance before the end of the term. For Canadians with plans to relocate, refinance or pay off their mortgages before the end of their term, an open mortgage has built-in prepayment flexibility, so borrowers can repay their loan at any time without penalties.
» MORE: Understanding open and closed mortgages
Insured/uninsured. If you’re a B.C. resident buying a house with a down payment of less than 20%, you’ll need mortgage insurance. A down payment of less than 20% results in a loan-to-value ratio of over 80%, making it a high-ratio mortgage which is considered riskier to the lender. The lender will usually include insurance costs in your monthly payments or charge a lump sum at the outset of the mortgage term. Insured mortgages are not available on homes that cost more than $1,000,000. If you put more than 20% of the total purchase price down, you’ll qualify for an uninsured, or conventional mortgage.
What happens at the end of your mortgage term?
At the end of your mortgage term, if you haven’t paid off the balance of your mortgage, you’ll have to renew your mortgage contract for another term. As you approach the end of your term, your lender will send you a renewal statement outlining your balance or remaining principal, the rate of interest, the new term, payment frequency and any fees.
Of course, if you’re looking to change your mortgage type — from fixed to variable, for example — or increase your payments, the end of the mortgage term may present an opportunity to renegotiate with your current lender.. If you take your mortgage renewal to a new lender at the end of the term, you will have to requalify and be approved for a mortgage.
If you’re looking to consolidate other debts into your mortgage or use the equity in your home for renovations or other purposes, you may wish to refinance your mortgage into a brand-new mortgage at the end of the term with the existing lender or with another mortgage provider.
In the latter case, as the mortgage is new, you will likely have reapply and pay for additional costs, such as a home appraisal legal fees or prepayment charges.
Mortgage prepayment penalties
Some mortgages, known as open mortgages, have no prepayment restrictions, which means you can pay extra towards your principal anytime you like.
Closed mortgage contracts may allow borrowers a ‘prepayment privilege’ either to increase regular payments or make an annual lump-sum contribution without facing a penalty. However, borrowers who exceed this amount will likely face a prepayment penalty, which will vary depending on the lender and the terms of the contract.
For fixed-rate closed mortgages, prepayment charges are generally calculated as the higher of:
- Three months’ interest on the amount you prepay (calculated at your annual mortgage interest rate).
- The interest rate differential (IRD) on the prepaid amount (the difference between your interest rate and the financial institution’s current posted interest rate for a similar mortgage term).
For variable-rate closed mortgages, prepayment charges are generally calculated as three months’ interest on the amount you prepay.
Your down payment amount
The size of your down payment may affect your mortgage rate. The minimum down payment you’ll need depends on the purchase price of your home.
- For homes with a purchase price of $500,000 or less, the minimum down payment is 5%.
- For homes with a purchase price between $500,000 and $999,999, the minimum down payment is 5% for the first $500,000 and 10% for the amount above $500,000.
- For homes with a purchase price of $1 million or more, the minimum down payment is 20%.
In cases where borrowers are self-employed or have a low credit score, lenders may require a larger-than-minimum down payment.
While it might be surprising, it’s possible to get low mortgage rates in British Columbia with a down payment of less than 20%. That’s because the smaller down payment would mean those homebuyers would have a high-ratio mortgage and would be required to get mortgage insurance, sometimes known as mortgage default insurance or CMHC insurance. Since the mortgage is insured, lenders face fewer risks, so they can offer lower rates to these borrowers.
Credit score and income
Credit scores are another key measure the lender uses to determine borrowing risk. To qualify for the lowest mortgage rates at least one household borrower will need a minimum credit score of 660 or above.
For uninsured mortgages, the credit score requirements can be slightly less stringent, with buyers qualifying with scores between 620 to 680, depending on the lender. Private mortgage lenders may be willing to consider credit scores below this range, but rates are likely to be higher than with traditional lenders.
Ultimately, the higher the credit score, the more likely you’ll get a lower mortgage interest rate, as the lender will be more confident about your ability to repay the loan.
Your income will also determine how much of a mortgage you’ll qualify for. The higher your income, the larger the amount you may be approved to borrow. However, B.C. lenders will also consider your debt ratios to determine how much mortgage to approve.
Your gross debt service ratio, or GDS, which incorporates all housing expenses, shouldn’t exceed 32% of your gross annual income. In addition, your total debt service ratio, or TDS, which adds other debt such as student and consumer loans to your GDS, shouldn’t exceed 40% of your gross annual income.
» MORE: Understanding debt service ratios
What’s a “good” credit score?
Credit scores range from 300 to 900 in Canada. While there isn’t a magic number that determines whether you’ll qualify for financing, a higher score increases your odds of getting the mortgage you’re looking for at a favourable rate. Any number from 660 and up is considered a good score and is likely to get you approved for a mortgage, though each lender may have their own unique requirements.
What to know about credit scores if you’re new to Canada
If you’re new to Canada, you may need to build your credit score from scratch, which could take some time. While much of the work building a solid score is simply a matter of responsible fiscal management and patience, there are things immigrants can do to get a better credit score, such as applying for a secured credit card and paying bills on time.
Some lenders do offer newcomer mortgages that may allow little to no credit history. These loans are designed for those who have been in Canada for five years or less and have the required income for a home purchase.
The mortgage stress test
In addition to having a good credit score, B.C. homebuyers have to pass the mortgage stress test. The test is also required when you renew a mortgage with a new lender, refinance your mortgage or take out a home equity line of credit.
The test (which applies even to those who can put down a down payment of 20% or more) is designed to ensure that you’ll be able to make your mortgage payments even if there’s a rise in interest rates.
To pass the test you need to show that your income and existing debts will allow you to make mortgage payments at the “minimum qualifying rate.” As of December 2021, the minimum qualifying rate is based on either the higher of the benchmark rate of 5.25% or the mortgage rate offered by the lender plus 2%.
How to qualify for the lowest possible B.C. mortgage rate
The best way to qualify for low mortgage rates in B.C. is to be as financially healthy as you can be and choose the mortgage option that’s best suited to your needs. Here are some tips:
- Save a down payment of at least 20%.
- Work to strengthen your credit score before applying.
- Pay down debt to reduce your GDS and TDS ratios before applying.
- Choose a mortgage with a shorter term, such as 5 years, rather than a longer-term option.
- Shop around to compare mortgage interest rates and loan terms from different lenders.
Is the lowest B.C. mortgage rate the best rate?
Finding the lowest possible interest rate for the term you want and the mortgage amount you’re looking to borrow is a good place to start. Whether it’s ultimately a good rate for you in the long run, however, will depend on your personal circumstances and will likely come down to more than just the APR.
Be sure to research and compare features, such as the terms and conditions of the loan, its portability (in case you move), penalties for over-contributing or breaking the mortgage contract, the lender’s customer service record and the convenience of managing your mortgage via digital apps.
Use current B.C. mortgage rates to estimate your monthly payment
With interest rates fluctuating almost daily, getting a rate quote that is up to date is essential if you want to start exploring what you can afford.
Even a small rate increase can have a significant impact on your borrowing power and the total interest you’ll end up paying over your amortization period.
For example, let’s say that you’re looking at a $450,000 mortgage at a five-year fixed rate of 3%, with an amortization period of 25 years. The monthly mortgage payment on the loan would be $2,129.60 with $62,412.01 going towards interest over five years and $188,881.42 paid in interest over the 25-year amortization period.
If you had a 4% mortgage rate instead, the same loan would cost you $2,367.09 per month, $83,768.07 in interest over five years or $260,127.28 in interest over 25 years.
That extra percentage point on your mortgage term would end up costing you an additional $21,000 in interest over the five-year mortgage term, and more than $71,000 in extra interest payments over the life of your mortgage.
For an easy tool to calculate how much a B.C. mortgage loan will cost you with different rates over both the term and the amortization period, check out NerdWallet’s B.C. mortgage payment calculator.
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Frequently asked questions for B.C. mortgage rates
Yes, it is possible to negotiate with lenders on mortgage rates and fees, though lenders are not required to entertain negotiations. To put yourself in the best position to negotiate a lower rate, have a strong credit score, excellent credit history and a sizable down payment.
NerdWallet makes it easy to browse some of the best mortgage rates in B.C., from top lenders that have partnered with Homewise. You can easily customize these mortgage rates by loan type, rate type and your location. The rates are updated daily by to provide you with the most accurate options each day.
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