It’s an exciting time to be buying a house in BC right now. Interest rates are at historically low levels, and while prices are beginning to inch their way upward, particularly in some parts of the province, this is still a great time to be in the market for a new home. While the purchase price of a new home is an important number, another that is crucial is the rate of interest you will be paying for that home loan. Throughout BC mortgage rates remain historically low, which means that you can get the most house for your money, with a relatively low cost of financing.
When you apply for a loan with a traditional lender, one of their most important calculations involves testing whether or not you can afford that loan at a particular rate. If you are applying for any term shorter than five years, or if you want a variable rate loan, lenders in Canada have to use the benchmark rate. This requirement is in place because, prior to the slowdown of 2008 and 2009, lenders were not doing enough due diligence on potential borrowers, and banks were approving loans that borrowers had no business taking out in the first place. The result was foreclosure for too many; the government realized that the banks needed more regulations in order to keep that from happening again.
Mortgage Rates in BC
The initial benchmark rates came out in 2010, and they were pegged to the higher five year interest rate for conventional loans that the Bank of Canada was issuing. This is a very conservative look at the cost of a mortgage, though, because loans are available at significantly lower rates — as much as 1.5 percent lower — through mortgage brokers or alternative financing specialists. At the present time, the most recently reported benchmark mortgage rates BC has to offer are at 5.34 percent.
The reason for having this rate in place is to keep people who qualify for a mortgage in BC have a little bit of margin if necessary. If you’re applying for a variable rate loan, you’re taking advantage of rock bottom rates today while risking the fact that they may climb in the future. You don’t want your mortgage payments at the start of the loan to be your maximum, though, because in a variable rate loan an increase is highly likely. This is why lenders test your finances at the benchmark rate instead of the market rate.
BC Mortgage Rates
While the benchmark rate sits at 5.34 percent, you can get a variable five year term mortgage at 3.00 percent. If you want a fixed rate loan for five years, you can get that at 3.29 percent in BC. Both of those loans are available through the Bank of Montreal. If you can’t qualify for a loan with a traditional lender, an alternative financing specialist like Amansad Financial can connect you to the financing that you need with a private lender. Interest rates are going to be higher than the best bank rates, but they are still affordable. Because they vary by lender, call one of the financing specialists at Amansad Financial to find out the most accurate quote for your own financial situation.