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The Best Mortgage Rates in Prince Edward Island

Compare customized mortgage rates from PEI’s top lenders. Find the best fixed or variable mortgage rate for your needs.

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Rates updated:

Showing 7 of 8 results

Term

Lender

Rate

Monthly Payment

 

6 Months Fixed Rate


Marathon Mortgage

4.09%

$2,389.10

5 Year Fixed Rate


B2B Bank

4.29%

$2,438.36

3 Year Fixed Rate


Radius Financial

4.39%

$2,463.18

4 Year Fixed Rate


Scotiabank

4.54%

$2,500.64

5 Year Variable Rate


Marathon Mortgage

4.95%

$2,604.43

3 Year Variable Rate


Radius Financial

5.05%

$2,630.05

2 Year Fixed Rate


WealthONE Bank

5.29%

$2,692.00

1 Year Fixed Rate


Community Trust

5.54%

$2,757.25

Disclaimer: The rates displayed do not include any taxes, fees, insurance, or other additional charges. These rates are estimates and are not guaranteed. The actual rate and loan terms you receive will depend on our partner’s assessment of your creditworthiness, loan amounts, and other relevant factors. Please note that any potential savings figures provided are estimates based on the information you and our advertising partners have provided. Terms and conditions apply.
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Prince Edward Island mortgage rate update: November 2024

For the first time in a while, fixed mortgage rates are in the news. Unfortunately for mortgage shoppers in Prince Edward Island, most of the talk has been around fixed rates rising in response to the recent U.S. election.

U.S. government bond yields rose following Trump’s win on November 5, 2024, the result of investors selling their bonds and moving into more growth-oriented assets. When bond yields in the U.S. fall, the yields on three- and five-year government bonds in Canada tend to follow suit. 

This is significant because it’s those bond yields that determine Canada’s three- and five-year fixed mortgage rates. When yields increase over an extended period, fixed rates do too.

There was a notable spike in yields on November 6, but they quickly returned to their pre-election levels. Fixed mortgage rates haven’t moved, but with yields being significantly higher than they were in October, there’s no reason to believe that fixed rates will move anywhere but up.

For now, the lowest fixed mortgage rates in Canada are hovering around 4%.  

Variable mortgage rates remain stable, and won’t change until the Bank of Canada delivers its next overnight rate decision on December 11. Another cut is likely, but it’s difficult to say whether the Bank will announce another jumbo 50-basis point reduction. If it does, variable mortgage rates will once again be Canadians’ most affordable option. 

Historical trend: New mortgage loans in PEI

The average mortgage rate in Prince Edward Island

Prince Edward Island doesn’t have a single average mortgage rate. Even if you could access all the current mortgage rates on offer, it wouldn’t be much help. That’s because mortgage rate quotes are always specific to you. Lenders consider multiple factors, such as credit score, the type of mortgage and the amount needed.

Think about the “average mortgage rate” the way you would Prince Edward Island’s average home price: It’s interesting data to have, but it’s not necessarily relevant to your own home buying journey.

2024 PEI mortgage rate forecast

Variable mortgage rates

After the Bank of Canada’s decision to lower its overnight rate on July 24, variable mortgage rates continue shrinking. 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 determined by the government bond market, which is driven by investors’ decisions, fixed mortgage rates can be difficult to project over the long-term.

Prior to August 2024’s stock market turbulence, analysts weren’t expecting fixed mortgage rates to fall drastically before the end of 2024. But three-year bond yields quickly sank to their lowest point since April 2022, five-year yields dipped lower than they’ve been in over a year, and fixed mortgage rates edged below 4.3% in some cases. None of this was predicted.

Barring any more investor panic attacks, fixed rates should stay comfortably above 4% for the rest of the year.

Prince Edward Island housing market update: November 2024

Prince Edward Island’s housing market continued to heat up in October, with home sales rising 45% year-over-year in October according to the Prince Edward Island Real Estate Association.

The uptick in demand was met with an 8% increase in active listings and nearly 6% increase in new listings. The average sale price in the province, $393,904, was 3% higher compared to October 2023.

PEI home sales and price forecast

Many Canadians wonder how the Bank of Canada’s rate cuts will affect the housing market. Will it compel buyers who have been cautiously watching from the sidelines, or will they continue to wait, hoping that rate cuts are just getting started? These are the questions real estate experts — and home buyers — will be watching through the end of 2024.

A report released by real estate company Royal LePage forecasts home prices increasing 9% in the last three months of 2024 compared to the same period in 2023. A report from the Canadian Real Estate Association stated that listings are up this summer compared to 2023 but still below historical averages. 

Prince Edward Island first-time home buyer programs

Applicants for the PEI Down Payment Assistance Program can receive up to 5% of a home’s purchase price, up to a maximum loan of $17,500, as a loan to be used for the down payment. 

After an optional one-year grace period, the amount must be repaid in full, though no interest is charged. Interest of 5% per year is applied if you default on your repayments. Eligibility requirements include a household income of $100,000 or less and a home price of $350,000 or less. 

Prince Edward Island land transfer taxes

The property transfer tax on Prince Edward Island is 1% of the greater of the home’s purchase price or its assessed value. So, if the purchase price and the assessed value is $250,000, the transfer taxes will be $2,500.

Mortgage calculators to inform your home buying decisions

Guide to Prince Edward Island mortgage rates

Types of lenders in Prince Edward Island

Mortgage lenders in PEI tend to fall into four categories, which include:

Types of mortgages in Prince Edward Island

Fixed-rate mortgages

The interest rate stays the same for the duration of the mortgage term in a fixed-rate mortgage, even if the market fluctuates. Fixed rates typically:

Variable-rate mortgages

Variable mortgage rates increase or decrease whenever your lender’s prime rate increases or decreases. Variable-rate mortgages typically have rates that:

» MORE: The difference between fixed- and variable-rate mortgages

Hybrid-rate mortgage

A portion of your mortgage is subject to a variable rate and another portion is at a fixed rate of interest. These mortgages:

Insured and uninsured mortgages

If you buy a home for under $1 million, and your down payment is under 20%, you must insure your mortgage. Mortgage insurance adds to the cost of your loan. The cost of insurance equals a percentage of your mortgage, and the percentage depends on your down payment. The closer it is to 20%, the smaller your insurance payment is.

Homes worth $1 million or more require a down payment of at least 20%, so insurance is not required. 

Short-term and long-term mortgages

Short-term mortgages last five years or less. Long-term mortgages last over five years. With a shorter mortgage, you’ll need to renew sooner, which can provide flexibility. Short-term mortgages often have lower interest rates than long-term mortgage rates.

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, you’ll generally be penalized.

Closed mortgages often offer better rates than open mortgages. But open rate mortgages may be a good option if you think you may be able to pay off your mortgage early.

» MORE: Open vs. closed mortgages

How PEI lenders determine mortgage rates

The mortgage rate you’re offered in PEI will be based on two primary factors; one depends on the state of the economy, the other 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:

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 PEI

Some factors behind rates are beyond your control, but there are steps you can take to possibly qualify for the best mortgage rates. For example, you can:

Consider all your options. See if adjusting the loan type, the term length or the amortization period of your loan could help.

Factors that affect mortgage affordability in PEI

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 PEI mortgage 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 Saskatchewan, also consider:

You can also compare mortgage rates in other provinces to get a sense of how the rate you’ve been offered in Prince Edward Island stacks up:

Mortgage shopping is about more than just the interest rate

A low mortgage rate is usually a primary objective for buyers, but getting the lowest rate doesn’t necessarily mean you’re getting the best mortgage for your needs.

For example, you might opt for a fixed rate, which has a higher rate than a variable rate, if you’re uncomfortable with the risk of rates rising.

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 Prince Edward Island mortgage rates

What’s a good mortgage rate in Prince Edward Island right now?

As of november 2024, you can find fixed mortgage rates for under 4.3% in PEI, but variable mortgage rates are generally around 5%. The rate offers you receive depend on factors like your credit score, total debt level and income.

Will mortgage rates come down in 2024?

Mortgage rates have come down considerably in 2024. Three- and five-year fixed rates are around 4%, but may have reached their bottom for this year. Variable mortgage rates have already dropped by 1.25% and may fall another 50 basis points before the end of the year.

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