Kurt Woock
Beth BuczynskiNerdy Insight: The best mortgage rates in Newfoundland and Labrador edged up in April after rising government bond yields opened the door to higher three- and five-year fixed mortgage rates. These two popular fixed-rate options are still below 5% at many lenders, while variable mortgage rates will hold steady around 6% until the Bank of Canada reduces its overnight rate. That might not happen until June.
The best fixed and variable mortgage rates in Newfoundland
Mortgage Type
Purchase Price
Down Payment
Province
Term |
Fixed |
Variable |
|---|---|---|
| 1-Year |
|
|
| 3-Year | ||
| 4-Year |
|
|
| 5-Year |
Disclaimer: These rates do not include taxes, fees, and insurance. Your actual rate and loan terms will be determined by the partner’s assessment of your creditworthiness and other factors. Any potential savings figures are estimates based on the information provided by you and our advertising partners. Mortgage Brokerage Licensed in ON #12984, BC #X301004, MB and AB. Homewise can pursue mortgage brokering activity in SK, NL, NS and NB.
Data source:
Alternative and B mortgage lender rates
Find alternative and B mortgage lender mortgage rates in Canada.
Compare customized mortgage rates from Canada’s alternative and B mortgage lenders for free – all in one place
Newfoundland mortgage rate update: April 2024
Discounted mortgage rates have inched up in April. As of April 10, 2024, five-year fixed mortgage rates remain below 4.8% at some lenders, while three-year fixed mortgage rates can still be found for around 4.9%.
Recent activity in the government bond market could lead to slightly higher rates. The yields on three- and five-year bonds have been trending upward since late March. When bond yields rise or fall, fixed mortgage rates typically follow suit. Lenders are generally a lot quicker to increase their rates than they are to reduce them.
Variable mortgage rates remain elevated after the Bank of Canada held its overnight rate at 5% on April 10. The Bank’s rate hikes have likely come to an end, but the overnight rate, and variable mortgage rates, won’t be reduced until inflation is firmly under control and heading toward the Bank’s target of 2%. That may not occur until June or July.
Historical trend: New mortgage loans in Newfoundland
The average mortgage rate in Newfoundland
There isn’t a single average mortgage rate for Newfoundland and Labrador. Even if you could access all the current mortgage rates on offer, it wouldn’t be much help. That’s because any mortgage offer you receive is always specific to you. Lenders take into account multiple factors, such as credit score, the type of mortgage and the amount needed.
Think about the “average mortgage rate” the way you would average home price. It’s interesting data to have, but it’s not necessarily relevant to your own home buying journey.
2024 Newfoundland mortgage rate forecast
Variable mortgage rates
Variable mortgage rates are expected to finally begin decreasing in the first half of 2024. When they decline, and by how much, depends on the Bank of Canada’s overnight rate.
When inflation is running hot, the Bank raises the overnight rate to increase borrowing costs and cool the economy. Whenever the overnight rate increases, variable mortgage rates rise to the same degree.
If inflation trends closer to the Bank’s target rate of 2% in the first few months of 2024, it may feel confident lowering the overnight rate as soon as June. When the overnight rate falls, variable mortgage rates will soon follow.
Fixed mortgage rates
Because they’re driven by lenders’ reactions to activity in the government bond market, fixed mortgage rates can be difficult to predict over the long-term.
Based on bond activity in the latter half of February 2024, for example, lenders could drop their three- and five-year fixed mortgage rates moderately in March, but there weren’t many bargains on offer at the time of this writing.
Fixed mortgage rates could be somewhat lower by the end of 2024, but it’s unlikely that they’ll fall significantly below 5%.
Newfoundland housing market update: March 2024
In February, Newfoundland’s housing market bucked the trend seen in most other provincial markets by posting a decline in sales activity. Home sales across Newfoundland and Labrador dropped 6.3% year-over-year, according to the Newfoundland and Labrador Real Estate Association. Sales dipped by 6.8% in St. John’s and by 6.1% in the rest of the province.
Detached home sales in St. John’s decreased by a fairly dramatic 14.6% compared to February 2023.
Despite the slower sales, the average residential sale price in Newfoundland and Labrador rose by 9.9% year-over-year to hit $310,281.
Newfoundland home sales and price forecast
Real estate experts predict a more normal real estate market in 2024, though the bar for “normal” is low given the tumult of 2023. Many believe Bank of Canada interest rate hikes — a primary driver behind last year’s affordability crunch — are largely over. But exactly when and how quickly the Bank begins to taper interest rates down remains an important question mark.
A report released by real estate company Royal LePage forecasts home prices increasing about 5% by the end of the year, with most of that increase taking place in the second half of 2024. RE/MAX Canada suggests a more subdued average price increase of less than 1%.
Newfoundland first-time home buyer programs
First-time home buyers who’ve already been pre-approved for a mortgage can apply to a government program to receive grants of up to $1,500 plus a repayable loan of up to 5% of the home’s purchase price. The interest rate on the loaned amount is capped at the prime rate minus one percent, which is likely to be less than market rates. To be eligible, your household income can’t exceed $95,000, and your home price must fall under the limit, which varies by location.
Land transfer taxes in Newfoundland
Newfoundland doesn’t have land transfer taxes, but you’ll pay a fee to register your mortgage. The fee is $100 plus $0.40 for every $100 of your home’ value above $500.
Calculators to inform your home buying decisions
Guide to Newfoundland mortgage rates
Types of lenders in Newfoundland
Mortgage lenders in Newfoundland tend to fall into four categories, which include:
- Large chartered banks such as Scotiabank, RBC and TD.
- Credit unions such as Venture Credit Union and Atlantic Edge Credit Union.
- B lenders that work with borrowers with lower credit scores, such as MCAN and Equitable Bank.
- Private lenders, who typically deal with borrowers in need of short-term funding.
Types of mortgages in Newfoundland
Fixed-rate mortgages
The interest rate stays the same for the duration of the mortgage term in a fixed-rate mortgage, even if the market fluctuates. Fixed rates typically:
- Are higher than variable interest rates.
- Provide a greater sense of certainty. You can count on it remaining stable for the length of the mortgage term.
Variable-rate mortgages
Variable mortgage rates increase or decrease whenever your lender’s prime rate increases or decreases. Variable-rate mortgages typically have rates that:
- Can be lower than fixed rates at the time you apply for mortgages. Variable rates can save borrowers money over the length of their mortgage — but only if rates remain the same or fall.
- Can increase throughout a mortgage term. When interest rates go up, the monthly payment on a variable-rate mortgage can become more expensive.
» MORE: The difference between fixed- and variable-rate mortgages
Hybrid-rate mortgages
A portion of your mortgage is subject to a variable rate and another portion is at a fixed rate of interest. These mortgages:
- Can dampen the impact of fluctuating interest rates in a particularly turbulent or uncertain economy.
- Tend to be more difficult to transfer between lenders.
Insured and uninsured mortgages
If you buy a home for under $1 million, and your down payment is under 20%, you must insure your mortgage. Mortgage insurance adds to the cost of your loan. The cost of insurance equals a percentage of your mortgage, and the percentage depends on your down payment. The closer it is to 20%, the smaller your insurance payment is.
Homes worth $1 million or more require a down payment of at least 20%, so insurance is not required.
Short-term and long-term mortgages
Short-term mortgages last five years or less. Long-term mortgages last over five years. With a shorter mortgage, you’ll need to renew sooner, which can provide flexibility. Short-term mortgages often have lower interest rates than long-term mortgage rates.
Closed and open mortgages
The primary difference between closed and open mortgages is that you can pay off an open mortgage whenever you like and not pay a penalty. If you have a closed mortgage and make additional payments, you’ll generally be penalized.
Closed mortgages often offer better rates than open mortgages. But open rate mortgages may be a good option if you think you may be able to pay off your mortgage early.
» MORE: Open vs. closed mortgages
How Newfoundland lenders determine mortgage rates
The mortgage rate you’re offered by a lender in Newfoundland will be based on two primary factors; one depends on the state of the economy, the other on your financial situation.
Economic factors
Variable mortgage rates are influenced by the Bank of Canada’s overnight rate. When the overnight rate increases or decreases, a lender’s prime rate follows suit. Variable mortgage rates are based on a lender’s prime rate, so as the prime rate rises or falls, so do variable rates.
Fixed mortgage rates are determined by activity in the government bond market, particularly the yields on one-, three- and five-year bonds. Fixed mortgage rates follow the movement of those yields.
Your financial situation
Factors specific to you also affect the rates you’re offered. These include:
- Your credit score.
- Your income.
- Your total debts.
- The loan type you choose.
- The amount you’re borrowing.
- The term length and amortization period of your loan.
Lenders look for signs of risk when assessing these aspects of your finances. The riskier they perceive you to be as a borrower, the higher the rate they’re likely to offer you.
How to qualify for a lower mortgage rate in Newfoundland
Some factors behind rates are beyond your control, but there are steps you can take to possibly qualify for the best mortgage rates. For example, you can:
- Improve your credit score. A higher credit score generally results in better offers. Get a better score by eliminating existing debt and paying future bills in full and on time.
- Increase your income. It’s not always easy, but any additional income will improve your financial position. Lenders look at your income to assess your ability to afford a mortgage.
- Decrease your total debts. Pay down personal loans, student loans or other types of debts. Lenders consider your total debt load when determining the details of your loan.
- Consider all your options. See if adjusting the loan type, the term length or the amortization period of your loan could help.
Factors that affect mortgage affordability in Newfoundland
A home’s price and the rate you’re offered aren’t the only factors that affect how much mortgage you can afford. You’ll also have to account for the following components, which play a role in all mortgages.
Debt service ratios
Lenders use debt service ratios to determine how much of your income goes toward paying debt. If those ratios are too high, you may not qualify for the mortgage amount you need.
Car loans, credit cards and lines of credit are all examples of debt that require regular payments. Decreasing some of these balances, or relying less heavily on credit, can help you lower your debt service ratios.
The mortgage stress test
You will have to pass the mortgage stress test if you want a home purchase funded by a federally regulated financial institution.
The rules of the stress test say you must qualify for a mortgage at a minimum qualifying rate of either 5.25% or the rate you’re offered plus 2%, whichever is higher. If a lender offers you a rate of 5%, for example, you’ll have to demonstrate you can afford the same mortgage at 7%.
You may be able to avoid the stress test if you apply for a mortgage with a lender that is not federally regulated, like a credit union.
Your down payment
Your down payment is a critically important factor in determining mortgage affordability. The more you can put down, the less you’ll need to borrow. Your monthly mortgage payment will likely be smaller, and you’ll pay less in interest.
Mortgage term
The term is the length of time your mortgage contract is valid. In Canada, mortgage terms can run anywhere from six months to as long as 10 years.
Chances are that your mortgage will have multiple terms during the amortization period until you pay it off in full. Once your mortgage term ends, you can pay your loan off in full, renew it or refinance it.
Amortization period
A mortgage’s amortization period is the time it will take to pay off the loan in full. In Canada, the most common amortization period is 25 years. If your down payment is less than 20%, you can’t have an amortization beyond 25 years.
If your down payment is greater than 20%, you may find some lenders willing to offer amortization periods of up to 35 years.
Why would you want a longer amortization period? The longer your mortgage lasts, the smaller your monthly payment will be. You’ll pay more in interest, but that might be a worthwhile trade-off if it helps you keep your home.
How to compare mortgages from Newfoundland lenders
Use APR for greater accuracy
The annual percentage rate (APR) includes fees and closing costs the lender may charge in addition to the interest rate. A lender offering the lowest rate may actually have a higher APR due to those additional costs. Comparing APRs is the easiest way to see the complete cost of each offer.
Compare similar mortgages
For a comparison to be useful, the mortgages should have the same term, amortization period and payment frequency.
When looking for the best mortgage rates in Saskatchewan, also consider:
- Mortgage type.
- Ease of application.
- Prepayment penalties.
- Customer service.
- Any other fees not included in the APR.
You can also compare mortgage rates in other provinces to get a sense of how the rate you’ve been offered in Newfoundland and Labrador stacks up:
Mortgage shopping is about more than just the interest rate
A low mortgage rate is usually a primary objective for buyers, but getting the lowest rate doesn’t necessarily mean you’re getting the best mortgage for your needs.
For example, you might opt for a fixed rate, which has a higher rate than a variable rate, if you’re uncomfortable with the risk of rates rising. Or, if you expect to come into a sizable sum of money soon (via an inheritance, for example), paying a higher rate for an open mortgage, which allows you to pay it off early without penalties, could be worth it.
Frequently asked questions for Newfoundland mortgage rates
As of April 10, 2024, you could still find fixed mortgage rates for less than 5% and variable mortgage rates for under 6% in Newfoundland. The rate offers you receive depend on factors like your credit score, total debt level and income.
Variable mortgage rates could stay where they are until April or June 2024. Conditions in the bond market indicate that fixed mortgage rates could decline in early 2024, but they may not decrease significantly until the Canadian economy shows further signs of stability.
About the Author
DIVE EVEN DEEPER
Mortgage Payment Calculator: Canada
Use this free Canadian mortgage calculator to estimate your monthly mortgage payments, and see how rates and amortization affect total cost over time.
Current Mortgage Rates in Canada
Compare current mortgage rates to find the lowest mortgage rate for your home buying needs.
Clay Jarvis
First-Time Home Buyer Guide: Strategies to Get You That First Property
First-time home buyers in Canada can use a combination of incentive programs, tax breaks and careful planning to afford their first property.
Kurt Woock
How Using A Mortgage Broker Can Save You Money
Mortgage brokers are licensed professionals who assess your finances and then help you find the appropriate mortgage product.
Hannah Logan