Clay Jarvis
Beth BuczynskiNerdy Tip: The best New Brunswick mortgage rates got a little better on June 5, when the Bank of Canada finally lowered its overnight rate. Variable mortgage rates should soon decline by 0.25% across the country. Current activity in the government bond market doesn’t indicate that any sudden spikes or dips in three- or five-year fixed mortgage rates are on their way. These two popular options are still below 5% at many lenders.
The best fixed and variable mortgage rates in New Brunswick
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New Brunswick mortgage rate update: June 2024
There’s finally some good news for variable-rate mortgage shoppers in New Brunswick: On June 5, the Bank of Canada lowered its overnight rate by 0.25%. When the overnight rate dips, so do variable mortgage rates, so the Bank’s rate cut should soon be reflected in lenders’ variable-rate mortgage offers.
Fixed mortgage rates are holding steady in New Brunswick. As of June 5, 2024, five-year fixed mortgage rates remain below 4.7% at some lenders, while three-year fixed mortgage rates can still be found for around 4.9%.
Recent activity in the government bond market doesn’t indicate that any major fluctuations are waiting around the corner for New Brunswick home buyers. The yields on three- and five-year bonds have bounced around a bit, but not so much that lenders have adjusted their rates by more than a few basis points here and there.
Historical trend: New mortgage loans in New Brunswick
The average mortgage rate in New Brunswick
There’s not much value in calculating the average mortgage rate in New Brunswick. It would include every mortgage type and term length from every lender, including the above-average rates associated with open mortgages and private mortgages. Most of this info won’t be relevant to your borrowing situation.
The only rates that matter are the ones that might apply to the mortgage you hope to be approved for. If you’re interested in a variable-rate mortgage, for example, compare variable mortgage rates. If you’re looking for more stability, compare fixed rates according to term length. Specific comparisons like these will give you more relevant information to work with.
Your mortgage rate will ultimately be determined by your finances, so it doesn’t really matter what other people are paying.
2024 New Brunswick mortgage rate forecast
Variable mortgage rates
After the Bank of Canada’s decision to lower its overnight rate on June 5, variable mortgage rates are finally set to drop a bit. A reduction in the overnight rate typically leads to an identical decline in lenders’ variable rates.
How many times variables dip in the last half of 2024 remains to be seen. The Bank of Canada will be cautious about cutting the overnight rate too quickly, which could trigger another rise in inflation. Another two modest cuts by year end is a reasonable expectation.
Fixed mortgage rates
Because they’re driven by lenders’ interpretations of activity in the government bond market, fixed mortgage rates can be difficult to predict over the long-term.
Based on bond activity in the fourth quarter of 2023, for example, lenders could have dropped their three- and five-year fixed mortgage rates moderately in January, but there weren’t many bargains on offer at the time of this writing.
Fixed mortgage rates could be somewhat more affordable by the end of 2024, but they may not drop significantly lower than 5%.
Calculators to inform your home buying decisions
New Brunswick housing market update: June 2024
May 2024 saw below average activity in the New Brunswick housing market. Residential sales in the province dipped 5% year-over-year, according to the New Brunswick Real Estate Association. Sales increased in Fredericton (2.6%) but fell in Saint John (-2.9%) and Moncton (-11.7%).
In May, the average sale prices for detached homes sold in New Brunswick’s three biggest markets were:
- $370,311 in Moncton.
- $360,791 in Fredericton.
- $340,611 in Saint John.
New Brunswick home sales and price forecast
According to the Canadian Real Estate Association (CREA), the New Brunswick housing market should remain relatively flat in 2024.
CREA expects home sales to increase by 2% — about 200 sales — compared to 2023. That’s the smallest increase projected for any province.
Price growth might be a little more robust. CREA expects the average sale price in New Brunswick to increase by 2.7% in 2024. That would result in an average price of just over $301,495.
New Brunswick first-time home buyer programs
New Brunswick’s Homeownership Assistance Program (HAP), is intended for first-time home buyers earning a total household income of $40,000 or less. Those living in substandard housing units are also eligible.
The HAP offers loans of up to $75,000, which are meant to be combined with mortgage financing. No interest is charged on the HAP loan if the borrower’s income is less than $30,000; the interest rate increases by 0.5% for every $1,000 in adjusted income beyond $30,000. HAP loans are expected to be paid back within 25 years.
A similar program, the Off-Reserve Aboriginal Home Ownership Program, is available for Indigenous New Brunswick residents interested in buying or building their first home. To qualify, borrowers must earn a total household income of $55,000 or less, and have a shelter cost-to-income ratio no higher than 30%.
If you’re not eligible for these provincial programs, consider investigating federal initiatives such as the Home Buyers’ Plan or the First Home Savings Account. These tools can be combined, so it might be worth studying both to see which ones fit your goals and finances.
Land transfer taxes in New Brunswick
The current land transfer tax rate in New Brunswick is 1% of either a property’s agreed upon sale price or its assessed value, whichever is higher.
Guide to New Brunswick mortgage rates
Types of lenders in New Brunswick
Mortgage lenders in New Brunswick tend to fall into four categories, which include:
- Large chartered banks such as Scotiabank, RBC and TD.
- Credit unions such as OMISTA Credit Union and Brunswick Credit Union.
- B lenders that work with borrowers with lower credit scores, such as MCAN and Equitable Bank.
- Private lenders, who typically deal with borrowers in need of short-term funding.
Types of mortgages in New Brunswick
Fixed-rate mortgages
With a fixed-rate mortgage, the rate stays the same for the duration of the mortgage term, even if rates fluctuate.
Fixed rates provide certainty, which can make them easier to budget around than variable mortgage rates. That certainty comes at a price, though: Outside a few exceptions, fixed rates have historically been higher than variable rates.
Variable-rate mortgages
Variable mortgage rates rise or fall depending on which direction your lender’s prime rate moves. Depending on the state of the economy, a variable rate can increase or decrease multiple times during a mortgage term.
Variable rates are risky, which is why they’re typically lower than fixed rates. In a high-inflation environment, when lenders’ prime rates are driven upward by increases to the Bank of Canada’s overnight rate, variable mortgage rates can skyrocket.
» MORE: The difference between fixed- and variable-rate mortgages
Hybrid-rate mortgages
If you take out a hybrid-rate mortgage, a portion of your mortgage is subject to a variable rate and another portion is at a fixed rate of interest. Hybrid mortgages can dampen the impact of fluctuating interest rates in a particularly turbulent economy, but they tend to be more difficult to transfer between lenders.
Insured and uninsured mortgages
If you buy a home for under $1 million, and your down payment is less than 20% of the purchase price, you must purchase mortgage default insurance, which adds to the cost of your loan. In these cases, you’ll be getting an insured mortgage.
If your down payment is greater than 20%, or you’re buying a home where a 20% down payment is required, like an investment property or a home worth $1 million or more, insurance is not required. In this scenario, you’re getting an uninsured mortgage.
Insured mortgage rates tend to be lower than uninsured mortgage rates.
Short-term and long-term mortgages
Short-term mortgages typically last five years or less. Long-term mortgages last over five years. With a shorter term, you’ll need to renew your mortgage sooner, which can provide flexibility, but it can also increase risk if rates are trending upward as your renewal date approaches.
Closed and open mortgages
The primary difference between closed and open mortgages is that you can pay off an open mortgage whenever you like and not pay a penalty. If you have a closed mortgage and make additional payments that go beyond your pre-payment allowances, you’ll be penalized for breaking your mortgage.
Closed mortgages often offer better rates than open mortgages. But an open rate mortgage may be a good option if you think you may be able to pay off your mortgage early.
» MORE: Understanding open and closed mortgages
How New Brunswick lenders determine mortgage rates
The mortgage rate you’re offered by a lender in New Brunswick will be based on two primary factors; one based on the state of the economy and one based on your financial situation.
Economic factors
Variable mortgage rates are influenced by the Bank of Canada’s overnight rate. When the overnight rate increases or decreases, a lender’s prime rate follows suit. Variable mortgage rates are based on a lender’s prime rate, so as the prime rate rises or falls, so do variable rates.
Fixed mortgage rates are determined by activity in the government bond market, particularly the yields on one-, three- and five-year bonds. Fixed mortgage rates follow the movement of those yields.
Your financial situation
Factors specific to you also affect the rates you’re offered. These include:
- Your credit score.
- Your income.
- Your total debts.
- The loan type you choose.
- The amount you’re borrowing.
- The term length and amortization period of your loan.
Lenders look for signs of risk when assessing these aspects of your finances. The riskier they perceive you to be as a borrower, the higher the rate they’re likely to offer you.
How to qualify for a lower mortgage rate in New Brunswick
Some of the mechanisms that shape rates are beyond your control, but there are steps you can take to convince lenders to offer you the best mortgage rates. For example, you can try:
- Improving your credit score. A higher credit score generally results in better loan offers. Get a better score by eliminating existing debt and paying future bills in full and on time.
- Increasing your income. It’s not always easy, but any additional income you can earn will improve your financial position. Lenders look at your income to assess your ability to afford a mortgage.
- Decreasing your total debts. Lenders consider your total debt load when determining your mortgage rate. Pay down personal loans, student loans or other types of debts if you can.
- Consider all your mortgage options. Adjusting the loan type, term length or the amortization period of your loan could result in a better rate offer.
Factors that affect mortgage affordability in New Brunswick
A home’s price and the rate you’re offered aren’t the only factors that affect how much mortgage you can afford. You’ll also have to account for the following components, which play a role in all mortgages.
Debt service ratios
Lenders use debt service ratios to determine how much of your income goes toward paying debt. If those ratios are too high, you may not qualify for the mortgage amount you need.
Car loans, credit cards and lines of credit are all examples of debt that require regular payments. Decreasing some of these balances, or relying less heavily on credit, can help you lower your debt service ratios.
The mortgage stress test
You will have to pass the mortgage stress test if you want a home purchase funded by a federally regulated financial institution.
The rules of the stress test say you must qualify for a mortgage at a minimum qualifying rate of either 5.25% or the rate you’re offered plus 2%, whichever is higher. If a lender offers you a rate of 5%, for example, you’ll have to demonstrate you can afford the same mortgage at 7%.
You may be able to avoid the stress test if you apply for a mortgage with a lender that is not federally regulated, like a credit union.
Your down payment
Your down payment is a critically important factor in determining mortgage affordability. The more you can put down, the less you’ll need to borrow. Your monthly mortgage payment will likely be smaller, and you’ll pay less in interest.
Mortgage term
The term is the length of time your mortgage contract is valid. In Canada, mortgage terms can run anywhere from six months to as long as 10 years.
Chances are that your mortgage will have multiple terms during the amortization period until you pay it off in full. Once your mortgage term ends, you can pay your loan off in full, renew it or refinance it.
Amortization period
A mortgage’s amortization period is the time it will take to pay off the loan in full. In Canada, the most common amortization period is 25 years. If your down payment is less than 20%, you can’t have an amortization beyond 25 years.
If your down payment is greater than 20%, you may find some lenders willing to offer amortization periods of up to 35 years.
Why would you want a longer amortization period? The longer your mortgage lasts, the smaller your monthly payment will be. You’ll pay more in interest, but that might be a worthwhile trade-off if it helps you keep your home.
How to compare mortgages from New Brunswick lenders
Use APR for greater accuracy
The annual percentage rate (APR) includes fees and closing costs the lender may charge in addition to the interest rate. A lender offering the lowest rate may actually have a higher APR due to those additional costs. Comparing APRs is the easiest way to see the complete cost of each offer.
Compare similar mortgages
For a comparison to be useful, the mortgages should have the same term, amortization period and payment frequency.
When looking for the best mortgage rates in New Brunswick, also consider:
- Mortgage type.
- Ease of application.
- Prepayment penalties.
- Customer service.
- Any other fees not included in the APR.
You can also compare mortgage rates in other provinces to get a sense of how the rate you’ve been offered in New Brunswick stacks up:
Working with a mortgage calculator can help you compare different mortgages in a single place.
There’s more to mortgage shopping than the interest rate
Scoring a low mortgage rate might be a home buyer’s prime motivation, but getting the lowest rate doesn’t necessarily mean you’re getting the best mortgage for your needs.
For example, you could opt for a fixed rate, which might cost more than a variable rate, if you’re more comfortable with the certainty that your rate won’t increase during the term.
Or, if you expect to come into a sizable sum of money soon (via an inheritance, for example), paying a higher rate for an open mortgage, which allows you to pay it off early without penalties, could be worth it.
Frequently asked questions about New Brunswick mortgage rates
As of June, 2024, some lenders in New Brunswick were offering five-year fixed mortgage rates below 4.8%. Three-year fixed mortgage rates were around 5%, while five-year variable mortgage rates were around 6%.
Variable mortgage rates started decreasing on June 6, a day after the Bank of Canada reduced its overnight rate. How many more rate cuts happen this year is hard to say, but another two or three aren’t out of the question. Fixed mortgage rates will likely hover between 4% and 5% for the remainder of 2024.
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