Vancouver Mortgage Rates

With Vancouver being the largest city in British Columbia and one of the largest cities in Canada, mortgage lenders in Vancouver compete hard to get your business. This means that mortgage rates in Vancouver are around the same as in Toronto. As well, with the average home price in Vancouver being $1,175,000 compared to $1,080,000 in Toronto, you will need a similar mortgage amount. This will mean that you will have a similar amount of bargaining power on the mortgage rate you are offered as in Toronto.

The biggest difference between your mortgage options in Vancouver compared to Toronto is the lenders. Since Vancouver is in British Columbia and Toronto is in Ontario, some lenders may not offer mortgages in another province or may offer different rates depending on the province. This means that you won't be able to get all the exact same mortgage options as in Toronto, however many Vancouver lenders will be able to offer you similar options. The main difference between lenders in Vancouver versus Toronto will be the options for getting a mortgage at a credit union, with most of Ontario's and British Columbia’s credit unions only operating in their home province.

Single-family homes rose the most in price because of the demand from people wanting more space as they work from home. As long as employers allow their employees to continue working from home into the future, single-family homes and homes in the suburbs should continue to see the most demand and continue to lead the Vancouver housing market in price growth. This trend would also benefit cheaper communities in the Greater Vancouver Area, such as Langley, Abbotsford, and Port Coquitlam, where home buyers priced out of the Vancouver market might be able to afford a home in.

No matter where you purchase in BC, you will need a large mortgage amount. This will make even the smallest difference in your interest rate more important, and mean that simply shopping around for the best rate could lead to thousands of dollars in savings. For a $1,000,000 mortgage amount, if you shopped around for the best rate and managed to find a rate 0.2% lower than you originally got pre-approved at, it would lead to almost $2000 in savings per year in interest. Over a 5 year fixed term, this would save you over $9500, just for shopping around for the best rate!

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With prices all across Vancouver and in the Greater Vancouver Area rising as housing markets across Canada also rise, Vancouver is getting even more unaffordable for first time home buyers without existing equity. Considering that the median household income in Vancouver is ~$81,000, and the average price of a home in Vancouver is $1,175,000, this means that the average home price is ~14.5 times larger than the median household income. In addition to the large disparity between the median income in Vancouver and home prices, to purchase the average priced home in Vancouver you would need a down payment of at least $235,000. Even when you compare the median household income with more affordable types of housing such as condos and townhomes, it is still very unaffordable:

Even when compared to other large housing markets across Canada, Vancouver is one of the least affordable markets to buy a home in. In Toronto, which is another unaffordable housing market for many first time home buyers, the average home price is ~$1,080,000 and the median household income is ~$78,000, meaning the average home price is ~14 times larger than the median income. As well, Toronto home buyers will also need a high down payment, with at least $216,000 down needed for the average home price. In other major cities across Canada such as Calgary, Ottawa, and Montreal, buying a home is much more affordable with a lower down payment requirement and with home prices being much lower compared to household incomes:

Although buying a home in the city of Vancouver may not be within the budget of most first time home buyers, other cities throughout the Greater Vancouver Area may be within reach.

Located just a 25 minute drive from Downtown Vancouver, the city of Burnaby offers more affordable homes and a convenient location in the centre of the Greater Vancouver Area. Depending on where in Burnaby you are looking, the benchmark average home price in June 2021 is ~$800,000, which is much more affordable than the Vancouver Area average of $1,175,000.

Home prices in Richmond are much more affordable than the average in Greater Vancouver, despite the city only being 30 minutes south of the Downtown core. Richmond’s average home price is $923,000 as of June 2021, which still makes it ~11 times the median income in Vancouver. However, with Richmond having more homes below $1,000,000 in purchase price, you will need a much lower down payment with only $67,300 required down on the average home price in Richmond. This is much lower than $235,000 for the average Vancouver Area price.

Both Port Coquitlam and Coquitlam, British Columbia are cities in the center-north region of the Greater Vancouver Area. Both cities are within a 40 minute commute to the city centre of Vancouver, while offering fairly affordable home options, especially for first time buyers:

Although Maple Ridge, British Columbia is one of the farthest cities from the city centre in the Greater Vancouver Area, it does offer some of the lowest average home prices. With the benchmark home price average in Maple Ridge being $682,800, this will only require a down payment of $43,300, and is “only” ~8.5 times the Vancouver median household income.

Bordered by Burnaby on the west end and by Coquitlam on the east end, Port Moody is located close to all regions in the Greater Vancouver Area. Home prices in Port Moody are also much more affordable, with the average price being $751,900, meaning it is “only” ~9.3 times the median Vancouver area income.

Although both Surrey and Burnaby are smaller cities within the Greater Vancouver Area, mortgage rates in Surrey and Burnaby will be the same or at least very similar to mortgage rates in Vancouver. This is because lenders that operate in the city of Vancouver will also offer similar loans in the Greater Vancouver Area, meaning home buyers will have access to the same offerings.

A potential difference in mortgage rates between Surrey and Burnaby and the city of Vancouver is the smaller mortgage requirements in Surrey and Burnaby. Considering that the city of Vancouver has higher home prices than the two smaller cities, this will mean that you will naturally need a higher mortgage to purchase a home in Vancouver than Surrey or Burnaby. Having a larger mortgage need may entice some lenders to offer you a better rate to close your business, which will mean you might get a slightly lower mortgage rate in Vancouver than in Surrey or Burnaby.

On the other hand, considering that Surrey and Burnaby have lower home prices than Vancouver and are more likely to have homes below $1,000,000, this would allow more home buyers in Surrey and Burnaby to qualify for CMHC mortgage insurance. If you require mortgage insurance on your mortgage loan because you have a lower down payment, lenders may feel like they can give you a better rate because your loan will be protected if anything happens with your mortgage. This may result in you getting a lower mortgage rate in Surrey or Burnaby compared to Vancouver. Overall, the mortgage rate you will be offered with the same situation in Vancouver, Surrey, or Burnaby will be very similar.

Best 5-Year Fixed Mortgage Rates in Canada

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With so many options for mortgage lenders in Vancouver as one of Canada’s largest cities, shopping around and seeing the mortgage rates lenders are able to offer you to close your business is the secret to finding the best mortgage rate. This can be done in two ways:

1. Researching lenders and shopping around yourself: This process can start over the internet, where you will be able to compare the rates that each lender has, along with getting to know more information about lenders and their offerings. Other important factors to consider besides the mortgage rate when choosing a lender may include: mortgage terms, mortgage features, mortgage prepayment penalties, and the cost for add-on expenses such as mortgage protection insurance.

   Next, once you have found lenders that have very competitive rates and have mortgage offerings you like, meeting in-person with them to discuss options and rates is the next step. Since many lenders will leave room for negotiation, discussing mortgage terms with a representative may help you get a lower interest rate, especially if the lender knows your shopping around and that they may be able to close the deal with a lower rate. After meeting with different lenders, you will need to decide which is the best mortgage option for you.

2. Working with a mortgage broker: This option will require much less time and research to find a mortgage rate, and will give you the benefit of working with a mortgage professional. A Mortgage broker is a licensed professional who is able to work with multiple lenders in order to help you find the best option, and may even be able to access lenders that do not deal directly with home buyers. Your broker will pull the best rates that each lender is offering, and allow you to choose between them.

Both of these options will help you to find a better mortgage rate than not shopping around. If you want to be sure you are getting the best mortgage rate out there, doing a combination of both options will ensure that there is no lower rate you are missing out on.

There are over 260 Vancouver mortgage brokers who can help you find the lowest rate and a mortgage solution that helps you purchase a home. Besides just being there to help you shop around for rates, mortgage brokers are a helpful option to turn to if you are having trouble getting a mortgage for any reason. Their job as a dedicated mortgage specialist is to help you solve any problems related to getting a mortgage. This may include the following: if you are looking to get a mortgage in Vancouver from another country and are lacking credit history in Canada, if you have a bad credit score, or even if you have not enough income to qualify for a normal mortgage. In all these cases, a mortgage broker may be able to come up with a solution.

The Empty Home Tax is a yearly tax in the city of Vancouver on empty homes. Exemptions for the tax are:

• If you occupy the home or you allow someone else such as a family member or friend to live in the property,
• If the home is rented to a tenant who lives in it for 6 or more months of the year,
• If the home is having construction or renovations done to it that prevents someone from living in it for 6 or more months of the year, or
• If the property has been sold or bought during the year

The Empty Home Tax will not affect you as a home buyer who is looking to live in or rent out a home in Vancouver, however it may help you in the event you are searching for a home to buy or rent. The tax is 3% of the assessed value on the home, and will help bring more homes to the market, as some owners without a use for the property may potentially rent out their property or list it for sale to avoid this yearly tax. Also with the revenue that is collected through this tax, it leaves the city of Vancouver more money to build affordable housing, which can help increase the supply on the housing market, helping you to purchase a home.

In the second quarter of 2021, the Vancouver Area saw an uptick in the number of new construction housing starts compared to the same quarter in 2020, going from 5384 new home starts to 7972 new home starts. The second quarter of 2021 also saw a rise from the 1st quarter of 2021, which had 7322 new housing starts. However, the number of completed homes only rose slightly from the second quarter of 2020 to the second quarter of 2021, from 6470 to 6536. Higher housing starts do mean that in the future we will see more finished new homes hit the market, however the amount of new home construction in the city may not be enough to moderate home prices to make buying a home in Vancouver affordable.

New Home Construction in Vancouver

Similar to across the province, buyers purchasing in Vancouver will incur BC property transfer taxes. This tax occurs at a marginal rate depending on the purchase price, starting at 1% for the first $200,000 of the purchase price, and progressively increasing all the way up to being 5% on amounts over $3,000,000. Since property transfer taxes can add tens of thousands in expenses to total home cost, it should be considered when deciding on how much of a mortgage you need to purchase a home.

For first time home buyers in Vancouver, the BC government does offer a rebate on your property transfer taxes for up to $8000. However, rebates only apply to home prices below $525,000, meaning likely the only chance of being eligible for this rebate is if you are purchasing a condo in lower-priced regions of the Greater Vancouver Area.

Like other major cities in Canada such as Toronto, the cost of living in Vancouver is very high and makes it very difficult for first time buyers to save for a down payment. For the average family of 3 with a young child attending preschool, they can expect to pay $5043 per month in basic living expenses. This breaks down to $2578 for housing expenses (for a 2 bedroom apartment), $1065 for food, $446 for transportation, and $954 for preschool costs. With a median after-tax household income in Vancouver of $6733 per month, if you were to put the rest of your leftover income towards a down payment on the average priced home in Vancouver of $1,172,800, it would take at least 139 months or almost 12 years to save up a large enough down payment.

Vancouver’s rental market, which typically has vacancy rates on rentals under 2% now has a vacancy rate of 2.6%. Part of this can be explained by so many people purchasing homes over the last year to live in, people looking in the suburbs for more space, and with less students and immigration in the city because of the effects of the Covid-19 pandemic. This may make it a good time to look at purchasing or even renting a condo in the city, with more landlords having empty properties.

With a population of over 2.7 million people in the Metro Vancouver Area, this makes the city the 3rd largest in Canada. The population in the city is only expected to continue to grow, with a projected population by 2050 of over 3.8 million people. The Vancouver area is home to many large employers, including the big 6 banks, HSBC, IBM, Amazon, Microsoft, Electronic Arts, and Boeing. As both the population continues to grow in the region and the economy continues to create more jobs, the demand for housing in Vancouver will only continue to rise. This makes it especially important for new homes to continue being built in the area, to accommodate this higher demand.

With such high home values and with Vancouver's Empty Home Tax generating revenue for the city, the property tax rate in Vancouver for 2020 is one of the lowest in the province, at 0.2926%. The chart below shows how much your yearly property tax bill would be depending on your appraised value:

Low property taxes help home buyers to be able to manage higher mortgage amounts, with a lower annual cost being spent on property tax. Depending on your mortgage lender and mortgage terms, you may be encouraged to pay your property tax through your lender when you pay your monthly mortgage payments.