Menu Toggle
Search
  1. Home
  2. Mortgages
  3. The Best Mortgage Rates in Prince Edward Island
Published February 15, 2024

The Best Mortgage Rates in Prince Edward Island

Compare customized mortgage rates from PEI’s top lenders to find the best mortgage rate for your needs.

Written By

Edited By

Nerdy Insight: Prince Edward Island’s best mortgage rates are a little better in February thanks to lower three- and five-year fixed rates. But with government bond yields on the rise, it may not be long before lenders reverse course and boost their fixed rates. Variable mortgage rates will remain elevated until the Bank of Canada lowers its overnight lending rate. That’s not likely to happen before June.

The best fixed and variable mortgage rates in PEI

Rates updated: January 10, 2024

Mortgage Type

Purchase Price

Down Payment

Province

Term

Fixed

Variable

1-Year

Rate

6.79%

Est. payment

: $3,120.00/mo
B2B
:
EXPLORE NOW
3-Year

Rate

5.24%

Est. payment

: $2,694.00/mo
Manulife Financial
:
EXPLORE NOW

Rate

6.30%

Est. payment

: $2,982.00/mo
Radius Financial
:
EXPLORE NOW
4-Year

Rate

5.04%

Est. payment

: $2,641.00/mo
RFA
:
EXPLORE NOW
5-Year

Rate

5.04%

Est. payment

: $2,641.00/mo
First National
:
EXPLORE NOW

Rate

6.10%

Est. payment

: $2,927.00/mo
Equitable Bank
:
EXPLORE NOW

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

The average mortgage rate in Prince Edward Island

Prince Edward Island doesn’t have a single average mortgage rate. Even if you could access all the current mortgage rates on offer, it wouldn’t be much help. That’s because mortgage rate quotes are always specific to you. Lenders consider multiple factors, such as credit score, the type of mortgage and the amount needed.

Think about the “average mortgage rate” the way you would Prince Edward Island’s average home price: It’s interesting data to have, but it’s not necessarily relevant to your own home buying journey.

Historical trend: New mortgage loans in Prince Edward Island

Prince Edward Island mortgage rate update: February 2024

Toward the end of January, mortgage rates finally dipped in response to falling three- and five-year government bond yields. Generally, this kind of action in the bond market would lead to faster reductions in three- and five-year fixed mortgage rates, but lenders don’t usually rush to serve up bargains.

As of February 12, 2024, lenders were offering five-year fixed rates below 4.8% on certain mortgage products, while three-year fixed mortgage rates were available for around 5%.

Five-year terms being a more affordable option puts PEI’s mortgage shoppers in a bind: A five-year term isn’t overly attractive if rates are expected decline significantly by 2025 or 2026, but it may be easier to qualify for once the stress test is factored in.

According to the Bank of Canada, the average posted rate for a one-year, fixed-rate mortgage was an eye-watering 7.84% as of February 7. At an average posted rate of 6.99%, three-year fixed mortgage rates might be more affordable, but they require borrowers to pass the stress test at a brutal 8.99%. 

Don’t let your bank’s posted rates make you hyperventilate, though. They’re meant to be negotiated down, and should be closer to the rates found on the table above.

Variable mortgage rates remain elevated after the Bank of Canada held its overnight rate at 5% on January 24. 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 2024.

Prince Edward Island housing market update: February 2024

In January, home sales edged up almost 12% year-over-year in Prince Edward Island, according to the province’s real estate association. A 12.2% annual increase in new listing improved the province’s inventory situation, and helped keep PEI’s benchmark price, $341,200, unchanged compared to a year ago.

PEI 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%. 

Prince Edward Island first-time home buyer programs

Applicants for the PEI Down Payment Assistance Program can receive up to 5% of a home’s purchase price, up to a maximum loan of $17,500, as a loan to be used for the down payment. 

After an optional one-year grace period, the amount must be repaid in full, though no interest is charged. Interest of 5% per year is applied if you default on your repayments. Eligibility requirements include a household income of $100,000 or less and a home price of $350,000 or less. 

Prince Edward Island land transfer tax

The property transfer tax on Prince Edward Island is 1% of the greater of the home’s purchase price or its assessed value. So, if the purchase price and the assessed value is $250,000, the transfer taxes will be $2,500.

Mortgage calculators to inform your home buying decisions

Mortgage payment calculator ↗

Estimate your monthly mortgage payments.

Mortgage affordability calculator ↗

Estimate how much house you can afford.

Mortgage closing costs calculator ↗

Create a home buying budget by estimating your closing costs.

Guide to Prince Edward Island mortgage rates

Types of lenders in Prince Edward Island

A lenders. Big banks and credit unions are A lenders and offer borrowers the best rates currently available. You’ll need a strong credit score before being offered a loan, and you’ll be expected to pass a stress test

B lenders. Some smaller Canadian banks and mortgage investment corporations work with people who have poorer credit scores or limited credit history. Rates are higher as a result. 

Types of mortgages in Prince Edward Island

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:

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:

» MORE: The difference between fixed- and variable-rate mortgages

Hybrid-rate mortgage. A portion of your mortgage is subject to a variable rate and another portion is at a fixed rate of interest. These mortgages:

Insured vs. 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 vs. 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 vs. 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: Understanding open and closed mortgages

How PEI lenders determine mortgage rates

The mortgage rate you’re offered in PEI 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:

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 PEI

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:

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 PEI

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.

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 shorter amortization period? You’ll pay less interest overall and potentially save thousands of dollars. A shorter amortization period, however, will result in higher monthly payments.

How to compare PEI mortgage lenders

Compare the annual percentage rate (APR) instead of the interest rate alone.The 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.

Be sure to compare the same type of mortgage. 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 Prince Edward Island, also consider:

You can also compare mortgage rates in other provinces to get a sense of how the rate you’ve been offered in Prince Edward Island 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 about Prince Edward Island mortgage rates

What’s a good mortgage rate in Prince Edward Island right now?

As of January 2024, you could still find fixed mortgage rates for less than 5.25% and variable mortgage rates for under 6.25% for a home purchase price of $400,000 and a down payment of 10%. The rate offers you receive depend on factors like your credit score, total debt level and income.

DIVE EVEN DEEPER

Find the Best Mortgage Rates in Canada

Find the Best Mortgage Rates in Canada

Compare customized mortgage rates from Canada’s best lenders and brokers for free. Find and easily apply for the lowest mortgage rate for your needs.

Mortgage Payment Calculator: Canada

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.

First-Time Home Buyer Guide: Strategies to Get You That First Property

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.

Mortgage Affordability Calculator: How Much Mortgage Can I Afford?

Mortgage Affordability Calculator: How Much Mortgage Can I Afford?

How much mortgage can you afford? Use our mortgage affordability calculator to see how your interest rate, down payment and debt ratios affect your housing budget.

Back To Top