If you plan to purchase a home in British Columbia, your primary concern is likely to be about finding the lowest mortgage rates. The good news is that the mortgage rates in BC are now more competitive than ever, and you might be able to find an option that fits your budget. Whether it’s fixed or variable rates, you can find a mortgage that will fit your financial situation. You can find the best mortgage rates in BC by comparing offers from both mortgage brokers and banks. Whether you are buying a home in Vancouver, Victoria, or elsewhere in the province, Mortgage Maestro can help you find the best rates. The BC housing market plays a significant role in influencing mortgage rates, so it’s good to be aware of its trends as well. We will be discussing the general state of the BC housing market, what you can do to find the best mortgage rates, and answer some of the frequently asked questions about them.
Housing market in British Columbia
In BC, the housing trends can sometimes be unpredictable, as Vancouver is one of Canada’s most expensive housing markets. Average price for detached houses in Vancouver have surpassed $1.3 million as of 2021, this upward trend has also impacted the national average. The national average price for a house in Canada now is approximately $624,000.
Land transfer tax is one of the main factors responsible for the high home prices in BC. The tax rate depends on the purchase price. Here is a breakdown of the tax rates:
- Purchase prices of $200,000 or less: 1%
- Purchase price more than $200,000 and less than 2 million: 2%
- Purchase price between $2 million & $3 million: 3%
- Purchase price of $3 million and more: 5%
However, first-home buyers can apply for full or partial rebates and save money on the land transfer tax. For properties costing less than $500,000, you can qualify for a complete rebate, and for properties costing between $500,000 and $525,000, you can apply for a partial rebate.
Why are mortgage rates in BC low?
Despite the high-priced housing market, BC mortgage rates are among the lowest in the country. Compared to other provinces, they often rival those in Ontario. There are many brokers and credit unions in BC, and they often work together to fend off big banks that offer mortgages. The more robust the competition, the lower are the mortgage rates.
Frequently asked questions about BC mortgage rates
How much money can you save when comparing mortgage rates?
If you find a mortgage rate that fits your financial and personal needs, it can help you save plenty of money. For a mortgage of $500,000 with a 25-year term, a difference of 0.3% in rate can add approximately $75 to your monthly payment.
What’s the difference between variable and fixed rates?
Fixed-rate mortgages are where the interest rate is secured for a defined number of years. The rate stays unchanged even if the prime rate fluctuates. Variable rates are dependent on market conditions and can change if the prime rate changes. The changes do not impact your monthly payment. If the interest rate increases, a higher portion of your monthly payment will go towards interest rather than the principal amount. If the interest rate decreases, a higher percentage of your monthly payment will go towards principal repayment rather than interest.
Which rates are better: fixed or variable?
It depends on your unique requirements. A fixed-rate will be better if you want stability and intend to pay the same amount every month. Otherwise, variable rates are a good option if you have the financial stability to make payments month to month regardless if they are lower or higher than the previous month. Consider your financial situation, what you are looking for in a mortgage, and your preferred mortgage term.
Open or closed mortgages: Which is better?
If you are looking for the ability to change your mortgage payments or make lump sum payments without restrictions, open mortgages will work to your advantage. With closed mortgages, there are restrictions and even penalties if you overpay.
Should I use a BC-based mortgage broker?
Finding a mortgage broker based in British Columbia can be a good option, especially for low mortgage rates. Mortgage brokers are experienced, knowledgeable, and you risk nothing when talking to them regarding your mortgage.
Mortgage Maestro works with 50+ lenders to find you the best mortgage rates that meet your short & long-term financial goals, so give us a call if you’re looking to get a mortgage in the BC area.