TODAY'S
MORTGAGE RATES IN British Columbia

British Columbia's mortgage market is showing signs of renewed optimism in 2025. After years of rising rates, homeowners and buyers now have more affordable options. As rates begin to come down, this year could offer significant opportunities for those ready to act.

Interest Rate Trends in BC

• As of January 2025, the best 5-year fixed mortgage rate in BC is 4.14%, and variable rates start at 4.35%.

• Prime Rate is expected to drop to 4.45% by year-end.
• Fixed rates could fall another 0.5%, possibly reaching 3.6% by late 2025.

What’s Driving BC Mortgage Rates?

Several factors are pushing rates lower, creating a more favourable environment for borrowers:

• Bank of Canada Policy: Analysts project that the overnight rate will hit 2.25% by December 2025, directly influencing fixed and variable mortgages.

• Bond Yields: Fixed mortgage rates closely follow bond market trends, which have recently stabilized. The stabilization of bond yields allows lenders to offer more competitive fixed rates.

• Economic Conditions: Slower inflation and moderated GDP growth across Canada are helping to ease overall borrowing costs.

These changes mean that BC borrowers can expect continued improvement in affordability, especially for those actively monitoring rate trends.

What to Expect in 2025

With mortgage rates trending downward, 2025 is a smart time to plan ahead. Lower borrowing costs may be temporary, so staying informed is essential for anyone looking to make confident, timely decisions in a changing market:

• For Renewals: Begin shopping for a new rate several months before your term ends to secure the best deal.

• For Refinancing: Take advantage of declining rates to reduce monthly payments or consolidate higher-interest debt.

• For First Time Buyers: Fixed rates offer an appealing option, combining stability with affordability.

No matter your goals, keeping an eye on rate changes and acting strategically will help you make the most of the more borrower-friendly market in 2025.

British Columbia's housing market is one of the most dynamic in Canada. Known for high prices and limited inventory, it continues to evolve under the influence of new policies, mortgage rate changes, and regional factors.

Evolution of the BC Housing Market

From 2010 to 2020, low interest rates and strong migration drove price growth. Pandemic years saw buying surges and record highs. The market cooled in 2023 but showed recovery by late 2024.

Current Housing Market Conditions in British Columbia

• Balanced Market: 59% sales-to-new-listings ratio as of November 2024.

• Regional Differences: Vancouver remains competitive; Fraser Valley and Okanagan are more balanced.

• Steady Growth: Average BC home price is $984,959 (1.8% year-over-year increase).

2025 BC Housing Market Forecast

• Price Forecast: 3% rise expected, with Vancouver average home price nearing $1.3 million.

• Sales Growth: Projected 13% increase.
• Policy Impacts: Zoning changes near transit hubs could boost supply.

BC Housing Market by Region

• Greater Vancouver: Seller's market continues in high-demand areas.
• Fraser Valley: Balanced conditions, average price around $1.05 million.
• Victoria and Kelowna: Popular for lifestyle, especially among retirees.
• Northern BC: Resource-driven growth in areas like Prince George.

BC Real Estate Trends to Watch in 2025

• Housing Supply: Urban centers still face limited development.

• Policy and Rates: Lower mortgage rates may create brief windows of opportunity to buy.

• Regional Variations: Trends differ significantly by area.

If you plan to buy a home in BC, understanding the mortgage and down payment requirements is key. Here are estimated values by region:

British Columbia offers various programs to make homeownership more accessible for first-time buyers. With high property prices across the province, these initiatives help reduce costs, offer financing support, and create opportunities for those entering the housing market.

Provincial Programs

• First Time Home Buyers' Program: Offers full exemption from Property Transfer Tax (PTT) for homes up to $500,000 and partial exemption for homes priced between $500,000 and $525,000. It can save buyers up to $8,000.

• BC Home Owner Grant: Provides up to $770 in tax relief for homes assessed at $2.125 million or less. For Metro Vancouver, Victoria, and Fraser Valley, the grant is $570.

• BC 40% Home Financing Plan: Allows government to finance up to 40% of the purchase price interest-free for 25 years or until resale. Buyers repay the loan plus 40% of any appreciation. This program has not yet launched.

Federal Programs

• Home Buyers' Plan (HBP): Withdraw up to $35,000 from RRSPs to fund a down payment.

• First Home Savings Account (FHSA): Save up to $40,000 tax-free and make tax-free withdrawals to buy a first home.

Municipal Programs

• Vancouver: Affordable Home Ownership Pilot Program offers select new homes at below-market prices.

• Victoria: Housing strategy includes exploring down payment assistance options.
• Kelowna: Attainable Housing Strategy focuses on increasing affordable home supply.
• Surrey: Affordable Housing Strategy supports buyers across income levels.

These programs vary by region and eligibility or funding can change. Contact your local housing authority or city hall for the most current information.

When you buy property in British Columbia, you'll encounter the Property Transfer Tax (PTT)—a fee for registering ownership of your new home. Whether purchasing a first home or upgrading to something larger, understanding how this tax works can help you save money and plan for closing costs. Let's break it down.

Tax Rates

PTT in BC is calculated based on the property's fair market value at the time of transfer. Here's how the rates are applied:

• 1% on the first $200,000
• 2% on the portion between $200,000 and $2,000,000
• 3% on the portion between $2,000,000 and $3,000,000
• 5% on any amount above $3,000,000

For example, a home priced at $2,500,000 would incur a total PTT of $53,000. The total tax amount includes $2,000 for the first $200,000, $36,000 for the next $1,800,000, and $15,000 for the portion above $2,000,000. Property Transfer Tax is a hefty expense, so knowing your tax obligation upfront is crucial for planning.

If you're purchasing your first home, you may qualify for an exemption that eliminates or reduces your PTT (Property Transfer Tax). To be eligible, you must meet specific criteria, including:

• Being a Canadian citizen or permanent resident
• Having lived in BC for at least 12 months
• Never having owned a principal residence anywhere in the world

This exemption applies to homes valued up to $500,000, with partial relief for homes priced between $500,000 and $525,000. For many first-time buyers, this can mean savings of up to $8,000.

Additional Exemption: Newly Built Homes

If you are buying a newly constructed home, you could qualify for the Newly Built Home Exemption, which waives PTT for homes valued up to $750,000. Partial exemptions apply for properties priced between $750,000 and $800,000. To qualify, you must:

• Use the property as your principal residence
• Be a Canadian citizen or permanent resident

Recent Program Updates: Rental Housing Incentives

As of January 1, 2025, newly constructed purpose-built rental buildings are exempt from the additional 2% PTT on the portion of the property value above $3,000,000. This update aims to incentivize rental housing construction and address the province's growing demand for affordable rental options.

How to Calculate Your PTT: Example Breakdown

Let's calculate the PTT for a property valued at $2,500,000:

• 1% on the first $200,000 = $2,000
• 2% on the portion between $200,000 and $2,000,000 = $36,000
• 3% on the portion between $2,000,000 and $2,500,000 = $15,000

Total PTT: $53,000

This example highlights how quickly the tax increases, especially for high-value properties. Planning for this cost is essential for a smooth purchase transaction.

Navigating British Columbia's mortgage market starts with a clear understanding of the rules that govern it. These regulations protect borrowers, ensure fair practices, and maintain a stable mortgage industry. Recent updates, including the introduction of the Mortgage Services Act (MSA), are reshaping how brokers, lenders, and other professionals operate—ultimately creating a safer environment for borrowers.

Oversight and Consumer Protection

The BC Financial Services Authority (BCFSA )regulates BC's mortgage industry, oversees licensing, and enforces conduct standards. Borrowers benefit from robust protections designed to promote transparency and accountability.

Key protections include:

• Mandatory terms and fees disclosure, which ensures borrowers fully understand their mortgage agreements.

• Streamlined discharge processes, which require lenders to provide mortgage discharge documents within 30 days after paying off a loan.

• Significant penalties for violations, with fines reaching up to $500,000 for individuals or businesses.

These measures create a more transparent and borrower-friendly mortgage process, reducing the risk of predatory practices or hidden fees.

Mortgage Services Act (MSA): A Modern Approach

The Mortgage Services Act (MSA) replaces the older Mortgage Brokers Act, bringing BC's regulations in line with the complexities of today's mortgage industry. Here are the key highlights:

• Licensing Requirements: The MSA establishes specific licensing categories, including principal brokers, individual brokers, and lenders. The categorization helps clarify roles and ensures all providers meet stringent professional standards. While banks and credit unions are exempt, private and non-Canadian lenders are now required to register.

• Enforcement Powers: The BC Financial Services Authority (BCFSA) can impose strict penalties, investigate misconduct, and enforce new industry rules. Borrowers can expect better accountability across the board.

• Consumer Protections: Enhanced disclosure requirements and stricter conduct standards reduce the likelihood of hidden fees or unethical practices, giving borrowers greater confidence in their mortgage agreements.

The MSA modernizes oversight and addresses gaps in the previous regulatory framework, creating a safer and more transparent mortgage market.

Why These Changes Matter

The updated regulations empower borrowers by offering greater transparency and more explicit protections. Here's how you can make the most of them:

• Verify Licensing: Before working with a broker or lender, confirm their licensing status through the BCFSA's online registry. Verifying licensing status ensures you deal with a professional who meets BC's updated standards.

• Understand Your Rights: Before signing, take advantage of the new disclosure rules to thoroughly understand your mortgage terms, fees, and conditions.

• Stay Informed: As the MSA continues to roll out, expect some changes to processes and documentation. Keeping up with these updates will help you quickly navigate the mortgage process.