The Best Mortgage Rates In B.C.

Editor’s Note: On July 24, the Bank of Canada lowered its overnight rate to 4.50%, a decrease of 0.25 percentage points. The change will likely lead to some relief for homeowners with variable rates. NerdWallet will track any rate updates from lenders as more information becomes available. Learn more about the rate cut.

Nerdy Insight: The best B.C. mortgage rates have been stable in July. Three- and five-year fixed mortgage rates remain comfortably below 5%, but current activity in the government bond market could open the door to lower rates. Variable mortgage rates will remain around 6% until the Bank of Canada lowers its overnight rate. That could happen on July 24.

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B.C. mortgage rate update: July 2024

Fixed mortgage rates are holding steady in B.C. As of July 12, 2024, five-year fixed mortgage rates remain below 4.7% at some lenders, while three-year fixed mortgage rates can still be found for around 4.9%.

Recent activity in the government bond market, where bond yields have been sinking, could open the door for lenders to improve their fixed rate offers later this month,

Variable mortgage rates remain well below 6% at many lenders after the Bank of Canada cut its overnight rate in June. If the Bank reduces the rate again on July 24, variable mortgage rates should follow suit the next day.

The average mortgage rate in B.C.

There’s no single average for mortgage rates in British Columbia. Even if you had access to all the current mortgage rates being offered by lenders in B.C., it wouldn’t be much help when you’re mortgage shopping. That’s because the mortgage offer you receive is always specific to you and takes into account multiple factors like your credit score, the type of mortgage you want and the amount you need to borrow.

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

2024 B.C. mortgage rate forecast

Variable mortgage rates

After the Bank of Canada’s decision to lower its overnight rate on June 5, variable mortgage rates are finally set to drop a bit. A reduction in the overnight rate typically leads to an identical decline in lenders’ variable rates. 

How many times variables dip in the last half of 2024 remains to be seen. The Bank of Canada will be cautious about cutting the overnight rate too quickly, which could trigger another rise in inflation. Another two modest cuts by year end is a reasonable expectation.

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%. 

Calculators to inform your home buying decisions

B.C. housing market update

Average home prices in B.C. 

The average residential home price in B.C. remained was $1 million in May, 1.5% lower compared to a year ago, according to the British Columbia Real Estate Association. Average May prices in major B.C. markets included:

• Greater Vancouver: $1,345,157.
• Vancouver Island: $755,148.
• Fraser Valley: $1,074,923.
• Victoria: $1,026,217.

B.C. 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%. 

Vancouver can expect price increases in 2024 to be under the national average, according to Royal LePage, but with a $1.7 million average price for a single-family home, this trend may not give much comfort unless you have a seven-figure budget. 

B.C. first-time home buyer programs

If you’re a first-time home buyer in B.C., you may qualify for programs, including:

• The B.C. First-Time Home Buyers’ Program, which can cut up to $8,000 from the land transfer tax owed on houses valued at $500,000 or less.
• The B.C. Home Owner Grant, which can reduce your property taxes if the home is your principal residence. This program isn’t limited to only first-time home buyers.
• The Newly Built Home Exemption, which reduces property transfer taxes on newly built homes worth less than $800,000.

Land transfer taxes in B.C.

The B.C. land transfer tax is a tax the purchaser of a home pays. The amount you pay is based on the value of your home, and the tiered-rate system means more expensive homes result in a higher rate. You’ll pay:

• 1% for the first $200,000 of your home’s value.
• 2% for any amount between $200,001 and $2,000,000.
• 3% for any amount greater than $2,000,000

The above rates cover the most common transactions. However, you’ll face different rates under some circumstances, including if:

• You’re a foreign national.
• The home is worth more than $3 million.
• The property includes a farm.

Guide to B.C. mortgage rates

Types of lenders in B.C.

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 B.C.

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 mortgage. One portion of your mortgage is subject to a variable rate and the other 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 vs. uninsured mortgages. If you make a down payment of less than 20% on a home costing under $1 million, you must insure your mortgage. Mortgage insurance adds to the cost of your loan. You pay a percentage of your mortgage amount, 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 term, you’ll need to renew your B.C. mortgage sooner, which can provide flexibility. Short-term mortgages often have lower interest rates than long-term mortgage rates.

Closed vs. open mortgages. The main 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 make additional payments on a closed mortgage, 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 B.C. lenders determine mortgage rates

The mortgage rate you’re offered by a lender in British Columbis will be based on two primary factors; one based on the state of the economy and one based 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 B.C.

Some factors behind rates are beyond your control, but there are steps you can take to encourage lenders to offer you the best mortgage rates. For example, you can:

• Improve your credit score. To start, pay down any outstanding debt and pay off every bill in full. A higher credit score generally results in better offers.
• Increase your income. This isn’t 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 any 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 B.C.

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 mortgages from B.C. lenders

Compare the annual percentage rate (APR) instead of the interest rate alone. The APR includes the interest rate, as well as fees and closing costs the lender may charge. A lender that offers you the lowest rate may have a higher APR due to those additional costs. Comparing APRs is the best way to see what different offers will truly cost you.

Be sure you’re comparing the same type of mortgage. For a comparison to be useful, the mortgages should have the same term, amortization period and payment frequency.

Other aspects to compare when looking for the best mortgage rates in B.C. include:

• 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 B.C. stacks up:

About the Author

Kurt Woock

Kurt Woock started writing for NerdWallet in 2021. Prior to joining NerdWallet, Kurt was a writer and educator for Colorado PERA, a retirement system for public employees. Before that he…

Read more about Kurt Woock and explore their articles

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