Best Mortgage Rates in Prince Edward Island
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Prince Edward Island mortgage rate update: August 2025
Variable rates are holding steady after the latest Bank of Canada interest rate decision.
Fixed rates are more likely to increase than decrease in August.
August could be a long month for PEI's mortgage shoppers.
On July 30, the Bank of Canada held its overnight rate at 2.75%. It was the Bank's third consecutive rate hold, and came as no surprise.
The rate hold means borrowers are stuck with today's variable mortgage rates until at least September 17, when the BoC is scheduled to make its next rate decision. Brokerages currently offer the lowest variable rates — around 4%. You might pay significantly more elsewhere.
At least variable rates are stable. Fixed mortgage rates could spend the rest of the summer inching up.
That's because government bond yields, which help determine lenders’ fixed rates, spent July on a steady upward trek. Yields tapered off somewhat toward the end of July, but they will begin August higher than they’ve been since January. When yields rise over an extended period of time, lenders often respond by increasing their fixed rates.
Fixed rates crept up here and there in the final days of July, but not to the extent that signals a wholesale shift. You can still find three- and five-year fixed rates advertised at around 4.1% at some mortgage brokerages.
Whether fixed rates rise further in the coming weeks is hard to predict, especially in the current economic climate. But it's a definite possibility. If you're considering getting a fixed-rate mortgage this summer, get pre-approved and lock in a rate as soon as possible.
What’s a good mortgage rate in Prince Edward Island right now?
As of July 2025, you can find three-year fixed and variable mortgage rates for around 4% at some PEI mortgage brokerages, but five-year fixed rates are generally 4.1% or higher.
2025 Prince Edward Island mortgage rate forecast
Mortgage rates may decrease further in the second half of 2025.
The Bank of Canada is expected to reduce its overnight rate again twice before the end of the year, which would lower variable mortgage rates by at least 0.5% versus today’s levels.
Fixed mortgage rates will likely continue hovering between 3.75% and 4.25% for the remainder of 2025.
Read more about the Bank of Canada's latest rate announcement.
The BoC makes policy interest rate announcements eight times a year. Find out how its latest decision might impact Canada's housing market.
PEI housing market update
The PEI housing market’s strong 2025 continued in July. Sales were up 5.6% year-over-year, reaching levels that haven’t been seen in five years. Sales were 12.1% above the five-year average for the month.
Year-to-date, sales in PEI were 12.9% higher than in the first seven months of 2024.
Home buyers in the province have plenty of listings to choose from. There were 1,359 homes on the market at the end of July, 29% above the five-year average for the month.
Prices, however, are still inching upward. According to the MLS Home Price Index, the Canadian Real Estate Association’s preferred tool for tracking price movement, the benchmark price in PEI was $379,200 in July. That’s 3.7% higher than a year ago.
Prince Edward home buyer resources
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 taxes
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 was $250,000, the transfer taxes will be $2,500.
Mortgage Calculators
Frequently asked questions
How do PEI lenders determine mortgage rates?
How do 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:
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.
Will mortgage rates come down in 2025?
Will mortgage rates come down in 2025?
The Bank of Canada overnight rate has been unchanged since March. If the bank lowers the rate, lower variable mortgage rates will follow. Fixed mortgage rates will likely continue hovering between 3.75% and 4.25% for much of the year.
How do you qualify for a lower mortgage rate in PEI?
How do you 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:
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.
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Clay Jarvis