10 Mar Navigating Mortgage Rates in Surrey, BC

For many Canadians, securing a mortgage is a key step in homeownership. Whether you’re purchasing your first home, renewing your mortgage, or investing in real estate, your mortgage rate plays a crucial role in determining your monthly payments and the total cost of borrowing.

Even a small difference in mortgage rates can significantly impact affordability. For example, on a $700,000 home—a common price point in cities like Surrey, BC—a 0.5% difference in interest rates could mean thousands of dollars in additional interest payments over the life of your loan.

So, what determines your mortgage rate? Why does it change over time? And how can you secure the best possible rate in today’s market?

The Bank of Canada’s Role in Mortgage Rates

While mortgage lenders set their own rates, the Bank of Canada (BoC) plays a major role in influencing them through its policy interest rate (also known as the overnight lending rate).

How the Bank of Canada’s Policy Rate Affects You

• When the BoC raises rates, borrowing becomes more expensive, and mortgage rates increase.
• When the BoC lowers rates, borrowing becomes cheaper, and mortgage rates decline.

March 2025 Update:

• The Bank of Canada’s current policy rate is 3.00%, following a rate cut in January 2025.

• More rate cuts are expected later this year, which could lead to lower mortgage rates for homebuyers.

What This Means for Homebuyers:

• If you’re looking to buy a home or renew your mortgage, consider watching for further BoC rate cuts before locking in a long-term fixed rate.

• Homeowners with variable-rate mortgages may see some relief in their payments later in the year.

How Mortgage Lenders Determine Rates

While the Bank of Canada’s policy rate sets the foundation, individual mortgage lenders—banks, credit unions, and private lenders—set their own rates based on additional factors.

1. Fixed-Rate Mortgages & Bond Yields

• Fixed mortgage rates are closely tied to Government of Canada bond yields, especially the 5-year bond yield.
• When bond yields rise, lenders increase fixed mortgage rates.
• When bond yields fall, lenders can reduce mortgage rates.

March 2025 Update:

• Five-year fixed mortgage rates have recently dropped below 4%, following declines in bond yields.

2. Variable-Rate Mortgages & Prime Rate

• Variable-rate mortgages are linked to the prime rate, which moves in response to BoC rate changes.
• When the BoC cuts rates, borrowers with variable-rate mortgages benefit from lower interest payments.

March 2025 Update:

• Variable mortgage rates are currently around 4.05% at mortgage brokerages and 4.50% at major banks. 

• Further rate cuts expected in 2025 could lower variable mortgage rates even more.

3. Lender-Specific Factors

Each mortgage lender adjusts their rates based on:

• Market competition – Brokers often offer lower rates than major banks.
• Risk exposure – Lenders charge higher rates for borrowers with lower credit scores or smaller down payments.
• Funding costs – Lenders set rates based on how much it costs them to borrow funds.

Mortgage Tip:

• Always compare rates from different lenders before signing a mortgage agreement.

• Consider using a mortgage broker to access a wider range of lenders and secure lower rates.

Economic Trends Impacting Mortgage Rates

Aside from lender policies, broader economic conditions influence mortgage rate trends across Canada.

1. Inflation & Mortgage Rates

• Higher inflation → Higher mortgage rates.
• Lower inflation → Lower mortgage rates.

March 2025 Update:

• Inflation is stabilizing, which could pave the way for more BoC rate cuts and lower mortgage rates.

2. Job Market & Wages

• A strong job market increases demand for housing, which can push mortgage rates higher.
• Slower job growth can lead to lower demand, putting downward pressure on mortgage rates.

March 2025 Update:

• Canada’s unemployment rate is 6.6%, with job growth slowing in early 2025.

• If the job market weakens further, we may see additional rate cuts from the BoC.

3. Housing Market Conditions

• In fast-growing real estate markets like Surrey, home demand often drives mortgage rates.
• If demand for homes slows, lenders may lower mortgage rates to attract borrowers.

March 2025 Update:

• The Surrey housing market has started to cool slightly, leading some lenders to offer more competitive mortgage rates.

Why Do Mortgage Rates Fluctuate?

Mortgage rates change frequently, sometimes even daily, based on:

• BoC interest rate changes → Direct impact on variable mortgage rates.
• Bond market movements → Affects fixed mortgage rates.
• Economic indicators → Higher inflation or wage growth can push rates up.
• Housing market trends → If demand for mortgages drops, rates may decline.

2025 Outlook:

• Lower mortgage rates are likely later in the year, making the next 6-12 months a good time to buy or renew.

How Your Financial Profile Affects Your Mortgage Rate

While the economy and lenders set the base mortgage rates, your individual financial health determines what rate you actually qualify for.

1. Your Credit Score – The Key to Unlocking the Best Rates

• Higher credit score = Lower mortgage rate.
• Lower credit score = Higher risk for lenders, meaning a higher rate.

Surrey Market Insight:

• Many lenders in Surrey and the Lower Mainland now require a minimum credit score of 680+ for their best rates.

• Some mortgage brokers can help secure competitive rates for buyers with scores in the 650-680 range, but options become limited below 650.

How to Improve Your Credit Score Before Applying:

• Pay all credit card bills & loans on time.

• Reduce your credit card balances below 30% of the limit.

• Avoid applying for new credit accounts before your mortgage application.

2. Down Payment – The More You Put Down, The Better Your Rate

• A higher down payment lowers lender risk, leading to better rates.
• If you put down 20% or more, you avoid CMHC mortgage insurance costs.

Surrey Market Insight:

• The average home price in Surrey is $1 million+, meaning buyers often need at least $200,000 down to avoid mortgage insurance.

• Buyers with 5-10% down payments will likely need insured mortgages, which can offer slightly lower rates but come with extra fees.

Mortgage Tip:

• If you’re saving for a down payment, consider Surrey’s First-Time Home Buyer Incentives, which provide tax credits and rebates to help reduce costs.

3. Debt-to-Income Ratio (DTI) – Lenders Want Low Debt Levels

Your debt-to-income ratio (DTI) measures how much of your income goes toward debt payments.

• Lenders prefer a DTI below 40%.
• If your monthly debt payments are too high, you may qualify for a higher mortgage rate or get denied.

Surrey Market Insight:

• Many buyers in Surrey and Metro Vancouver carry higher student loans, car loans, or credit debt—which impacts their DTI.

• Reducing existing debts before applying for a mortgage can improve your approval odds.

How to Lower Your DTI Before Applying:

• Pay off smaller debts before taking on a mortgage.
• Increase your income with side income sources or a co-borrower.

Fixed vs. Variable Mortgage Rates – What’s Best in 2025?

One of the biggest mortgage decisions you’ll make is choosing between a fixed-rate or variable-rate mortgage.

1. Fixed-Rate Mortgages – Stability & Predictability

• Your rate stays the same throughout your mortgage term.
• Protection from future interest rate hikes.
• Best if you want consistent, predictable payments.

Current Trend in Surrey:

• Five-year fixed rates have dropped below 4%, making them more attractive than they were in 2023-2024.

2. Variable-Rate Mortgages – More Risk, But Potentially Lower Costs

• Your rate changes based on the Bank of Canada’s policy rate.
• If interest rates drop, your mortgage payments go down.
• If rates increase, your payments could rise unexpectedly.

Current Trend in Surrey:

• Variable rates are around 4.05%, but could drop further in 2025 if the Bank of Canada lowers rates again.

So, Which One Should You Choose?

• If you prefer stability → A fixed-rate mortgage may be the safer option.\
• If you can handle fluctuations → A variable-rate mortgage might be a better choice, especially with expected rate cuts.

Expert Tip:
Some buyers in Surrey are choosing 3-year fixed mortgages to lock in lower rates now but keep the option open for future rate drops.

How to Get the Best Mortgage Rate in 2025

To secure the lowest mortgage rate, follow these key strategies:

1. Compare Lenders – Never Accept the First Offer

• Banks, credit unions, and brokers offer different rates—always compare.
• Mortgage brokers often secure lower rates than banks.

Surrey Market Insight:

• Many first-time homebuyers are saving thousands by using mortgage brokers instead of going directly to a bank.

2. Improve Your Credit Score Before Applying

• Pay down outstanding balances.
• Set up automatic payments to never miss due dates.
• Avoid opening new credit cards or loans before applying.

Example:
A 760+ credit score could mean saving $10,000+ in interest over a 5-year term.

3. Increase Your Down Payment

• If possible, aim for 20% down to avoid CMHC insurance fees.
• If that’s not possible, look into first-time buyer incentives available in BC.

Surrey Market Insight:

• The BC Home Owner Mortgage and Equity Partnership can help first-time buyers increase their down payment with government assistance.

4. Choose the Right Mortgage Term

• Shorter terms (2-3 years) → Better if you expect rates to fall further.
• Longer terms (5+ years) → Ideal if you want predictability and rate security.

2025 Trend:
Many buyers in Surrey are choosing 3-year fixed mortgages over 5-year terms to take advantage of future rate cuts.

5. Consider Prepayment Privileges

• Some lenders allow you to make extra payments without penalties.
• Paying more reduces interest costs and shortens your mortgage term.

Tip: Look for mortgages that allow at least 10-20% prepayment annually.

Final Thoughts: Navigating Mortgage Rates in 2025

• Mortgage rates are starting to decline, but remain high compared to pre-pandemic levels.
• The Bank of Canada may cut rates further, making variable rates more appealing in 2025.
• Your credit score, down payment, and debt levels all impact the rate you qualify for.
• Shopping around and working with a mortgage broker can save you thousands.

Need Mortgage Advice? Let’s Talk!

At Satbir Bhullar Mortgages, we specialize in helping buyers find the best mortgage rates in Surrey and across Canada.

📍 Buying, refinancing, or renewing your mortgage in Surrey?
📞 Call: (604) 751-1447
📧 Email: satbir@satbirbhullar.ca

🔹 Get expert mortgage advice and secure the best deal for your home! 🔹