The Different Types of Vancouver Mortgage

There are many mortgage types. Each is suited to a sub population's needs. We'll review them here before going into specific detail about rates specific to Vancouver.

•    A variable rate or floating rate will change over the term.  It is expressed as a supplement to the primary interest rate put forth by the Bank of Canada. Currently, the prime interest rate is 3.00%.  So a variable rate mortgage with a rate of prime + .75 would have a rate of 3.75% until of course the prime rate changes again. The interest-portion of your monthly payment will change from month to month in variable rate mortgage.

•    A fixed rate doesn't change during the term.  You can depend on a steady payment amount, equity gain and interest portion every month.

•    Open mortgages allow the borrower to make payments additional to the monthly payments so they can repay the mortgage sooner.  Open mortgage rates are typically higher because the lender needs to take the risk that the borrower will pay the debt quickly and produce less interest income for the lender.

•    Closed mortgages allow the borrower to make additional payments only at certain times, if at all.  Additional payments are also limited in size.

In addition to these generally accepted practices, there may be other features which might make a difference to your year-end bottom line.  For example one convenient feature is the mortgage holiday or mortgage relief.  This type of service allows the borrower to defer a month's mortgage and extend the term for one month.

Some best-rate comparisons between Vancouver and, say Ontario:

•    Vancouver mortgages for variable closed, compared with Ontario are slightly higher at 3.00% vs 2.88%.  
•    Variable open are an average of 3.83 in Vancouver vs.  4.00%, Ontario.
•    Fixed closed: Vancouver 4.11%, Ontario 3.41%
•    Fixed open: Vancouver 6.25%, matching Ontario at 6.25%

In general, at this time rates for Vancouver mortgages are uniformly higher compared to Ontario.  This is important if a plan to move is in the works, and mortgage rates are a significant factor in your choice of location across Canada.

It might also be worth noting that average house prices have dropped by close to 10% in Vancouver while they have gone up in other parts of the country, suggesting that demand for homes is lower to due to higher lending rates.