Mortgage rates in New Brunswick
New Brunswick's mortgage market is served by the major Canadian banks of BMO, CIBC, National Bank, RBC, Scotiabank, and TD Canada Trust. Collectively these banks originate the vast majority of mortgages in the province.
Along with regional credit unions, smaller schedule one banks such as Laurentian, Simplii Financial, and Tangerine also offer mortgage services in New Brunswick.
What's the difference between fixed and variable rate mortgages in New Brunswick?
Most mortgages in New Brunswick are fixed-rate mortgages. About 80% of mortgages in New Brunswick are fixed-rate loans. Fixed-rate mortgages give you predictability on the interest rate you'll be charged, ensuring your mortgage payments will remain the same throughout your mortgage term.
Variable-rate mortgages are the other primary type of mortgage rates. The advantage of a variable rate mortgage is that your interest rate can potentially be lower than a fixed-rate mortgage, provided your lender's prime lending rates remain low.
On the flip side, you may also end up paying more in interest costs on your mortgage. Variable-rate mortgages carry the risk that your interest rates could rise if your mortgage lender raises their prime lending rates.
If you believe that mortgage rates will remain low or will decrease further during your mortgage term, a variable rate mortgage could be a good option. If you're a little more risk-averse, than locking in a fixed interest rate on your mortgage could be a safer bet.
Ultimately the type of mortgage rate you choose comes down to how you believe interest rates will behave during your mortgage term and your ability to absorb higher interest costs if interest rates increase.
What is the difference between an open term and closed term mortgage?
When you get a mortgage and select the type of interest rate you want, you're also going to have to choose what type of mortgage term you want. A mortgage's term is the length of time you'll have to commit to a mortgage contract. On fixed-rate mortgages, the most common mortgage term is 5 years.
During your mortgage term, you'll have the option to make extra payments towards your mortgage balance; these are called prepayments. How much you can make in prepayments depends on the type of mortgage term you choose.
There are two main types of mortgage terms; closed term and open term. A closed term mortgage limits the annual amount of prepayments you can make on your mortgage. If you pay over your prepayment allowance, on a closed term mortgage, you will be charged a penalty.
On open term mortgages, you're allowed to make unlimited prepayments on your mortgage without penalty. Open term mortgages offer a lot more flexibility when it comes to paying down your mortgage quicker, but they typically come with higher interest rates than closed term mortgages.
Most homeowners choose to go with closed term mortgages, as they have lower interest rates and provide lengthier term options ranging from 6 months to 10 years. In comparison, open mortgage terms are usually 6 months or 1 year.
New Brunswick land transfer tax
New Brunswick charges a flat 1% land transfer tax (also called the Real Property Transfer Tax) on the purchase of a house or townhome. The tax is based on the higher of the purchase price or the assessed value of the property.
As an example, suppose you're buying a house in New Brunswick for $200,000. The Assessed value of the house is $210,000. In this case, you would have to pay tax on the $210,000 assessed value of the house. Your land transfer tax would be $2,100 ($210,000 x 1%).
On condominium purchases, New Brunswick charges a flat 0.5% land transfer tax on the higher of the purchase price or the assessed value of the condo (plus a $75 registration fee).
To illustrate how land transfer tax on a condo purchase would work, let's assume you purchased a condo in New Brunswick for $150,000. The assessed value of the condo is also $150,000. In this case, both the purchase price and the assessed value are the same. Your land transfer tax on the condo would work out to $825 ($150,000 x 0.5% + $75).
New Brunswick housing market
With a population of 776,000, New Brunswick has a quieter housing market compared to other regions in Canada.
71% of households in New Brunswick own the home in which they live, which is above the national average of 63%.
The current average price of a home in New Brunswick is $185,000, up from an average of $175,000 in 2018. The more urbanized areas of New Brunswick see higher house prices compared to the more rural parts.
In Fredericton, the largest city in New Brunswick, the average home sells for $205,000. In the province's capital, Moncton, the average home sells for $200,000.
New Brunswick mortgage brokers
Working with a mortgage broker can help you save time and money. A licensed mortgage broker acts as an independent middle person who connects mortgage borrowers with mortgage lenders.
Mortgage brokers can help you get a low-interest rate, on your mortgage, through volume discounts they receive from the lenders with which they work. They also make the mortgage application process more streamlined. You don't have to contact each mortgage lender individually, the broker does all the paperwork and negotiating directly with the lender.
In New Brunswick, licensed mortgage brokers are regulated by the Financial & Consumer Services Commission of New Brunswick (FCNB). Mortgage brokers in the province are required to meet specific educational requirements before they're able to do business in New Brunswick.
About New Brunswick
New Brunswick is the 8th largest province by population and the 9th largest by GDP. It's the only province to have both English and French as it's official languages.
Covered by 83% forest, New Brunswick is one of the most sparsely populated provinces in Canada's Atlantic region. The primary industries in New Brunswick are natural resource-based, with agriculture, farming, fishing, forestry, and mining, making up a sizable chunk of its economic output.
With over 90% of New Brunswick's exports going south of the border, the United States is the province's largest export market, with petroleum and seafood being the primary exported goods.