Best Mortgage Rates in British Columbia

British Columbia mortgage rate market characteristics

A recent survey by a large real estate company shows that half of Canadians living in the Vancouver area would consider buying a home in an affordable city if they could find work, or work remotely.

There’s a reason for that. British Columbia has some of the highest real estate prices in the country. According to the BC Real Estate Association, the average MLS residential price in BC in April 2024 was up 1.4% to $1 million, compared to an average price of $992,440 in the same time last year. In Greater Vancouver, the average price was more than $1 million, coming in at $1.049 million. Within Canada, the average price was $703,446.

BC also has the highest average mortgage loan value in the country. By comparison, the national average, as of the third quarter 2023, stood at $327,899. In BC that value was $454,516.

Interestingly, the population moving out of BC has grown. In 2023, Statistics Canada said net interprovincial migration was negative for the first time since 2012 at negative 8,624 people. In that same year, more than 67,000 people left the province.

And yet, housing prices remain the highest in the country. Why?

Despite the mass migration, BC’s population has been growing. As of January 1, 2024, Statistics Canada says that BC’s population grew to more than 5.6 million people with an increase of 178,515 people. A large chunk of that was driven by immigration with more than 70,000 people moving to the province.

But immigrant or long-standing citizens have a choice in the province when looking for mortgage options. An analysis from the Canadian Credit Union says BC has the largest asses base of credit union movement in Canada and most number of credit unions in the country. This gives people looking for a home a much wider opportunity for mortgage financing when shopping for the cheapest mortgage rates.

Because competition is high among different financial service providers, and serving a relatively large population, mortgage rates in BC are relatively low, as they are in Ontario, but compared to other parts of the country.

British Columbia housing market trend

British Columbia, despite an increase in people moving out of the province, has seen its population grow as a result of high immigration levels. As of January 1, 2024, Statistics Canada says that BC’s population reached an estimated 5.6 million, growing by 178,515 people in 2023, an annual growth rate of 3.3%. This is also the highest annual population growth since 1971 in terms of population counts. In Q4 2023, 32,909 immigrants moved to BC.

BC, unlike other parts of the country, is an attractive destination for a more moderate climate, rugged outdoor landscape, and in many ways a gateway to trade and commerce with Pacific nations overseas.

Based on British Columbia Real Estate Association (BCREA) data, May 2024 sales were down 11.6% compared to May 2023, which amounts to 8,075 unit sales being recorded that month. Greater Vancouver and Fraser Valley has the highest units sold in May, 2,733 and 1,433 units sold, respectively.

The average price for a residential home in BC was also down 1.5% to $1,001,736 in May 2024 compared to an average price of $1,017,310 in May last year. This could be mainly due to the reduction in house prices y-o-y in Powell River. The area recorded a 30.7% decrease in house prices in May 2024 compared to May 2023. The residential average price in Powell River in May 2024 was $539,153 compared to $778,299 in May 2023. Residential unit sales were flat year-to-date at 31,573 units sold.

While there has been a pick-up in sales activity to more normal levels in May 2024 compared to previous months, combined with increasing increased active listings, it still does not match the market level that was this time last year (May 2023).

According to the BCREA housing data, May 2024 residential active listings were up 42.4% to 39,602 compared to 27,814 active residential units listed in May 2023. However, the unit sales in May 2024 were lower at 8,075 unit sales compared to 9,136 units sold in May 2023. This clearly shows that while people are eager to list and sell their properties, potential buyers are reluctant due to high interest rates, and are waiting on the sidelines for the Bank of Canada to cut interest rate.

BCREA reports that in 2023, the total sales dollar volume was $71 billion, an 11.5% decline from 2022.BCREA Chief Economist Brendon Ogmundson said, “the highest mortgage rates in over 15 years led to the slowest sales in a decade for BC.”

With the Bank of Canada rate cuts on the horizon, the outlook for 2024 H2 appears much brighter. The BOC rate hikes from March 2022 to July 2023 was terrible for the real estate market all over the country for sure.

Tips for first-time homebuyers in British Columbia

Buying your first home is a serious decision but there are things to do ahead of time that can make the journey easier and less stressful.

• Understand your financial situation – Do an income analysis of your salary and debt. Calculate your credit score and other potential pitfalls to ensure you are ready to approach a lender for a mortgage.
  
• Consider all costs – Buying a home is more than the price of the house. There are legal fees, closing costs, perhaps the need for more home furnishings and more. Calculate what you can afford.
  
• First time home buyers’ program (BC) – This can reduce or eliminate the transfer tax you pay when you buy your first home. To qualify you have to be a Canadian citizen or permanent resident, have lived in BC for at least a year before the date you register the property, filed at least two income tax returns as a BC resident in the last six taxation years, have never owned a registered interest in a property that was your principal residents, and have never received a first time home buyers’ exemption or refund.
  
• Consider your mortgage options – You can choose from variable or fixed, which will depend on your comfort level and desire to have a fixed (or not) monthly budget.
  
• Location – It’s a real estate cliché but consider your future needs. Will you have a family? Do you need to be near a school or your work? Or amenities?
  
• Work with a real estate agent – They have knowledge and expertise about the market that you may not. They also (should) know the area and can guide you based on your budget and other needs.
  
• 30-year amortization for first-time homebuyers of new builds: In Budget 2024, the federal government announced some amendments to mortgage rules including allowing 30-year amortization on mortgages for first-time homebuyers purchasing newly built homes. Starting August 1, 2024, Canadians buying their first home, specifically a newly built home, can have additional five years to pay off the mortgage. Before this amendment, if your down payment was less than 20% of the price of your home, the longest amortization you were allowed was 25 years. Borrowers would need to satisfy some eligibility criteria set by the federal government to avail this benefit.