Ottawa Mortgage Rates

Ottawa Housing Affordability Compared To Toronto

The city of Ottawa has some of the highest household incomes in all of Ontario, with the largest employers in Ottawa being the federal government and the technology sector. Ottawa also benefits from much lower home prices than places like Toronto, making getting a mortgage affordable. With the median household income being ~$83,000 per year, the average price of a home is less than 8 times the median household income. Compared to Toronto at ~14 times the median household income, a mortgage in Ottawa is much more affordable. Even for a single family home with an average price of ~$725,000, it is still much less at ~9 times income. This combination of much lower prices and higher household incomes will mean that passing a mortgage stress test to get a mortgage is much easier.

As well, since most homes for sale in Ottawa are below the $1 million mark, it will mean that most home buyers will have a much easier time saving for a down payment. This will mean a much lower down payment is required because of a lower purchase price and the ability to get mortgage insurance. This means that for the average home price in Ottawa, you would be able to purchase with a down payment of ~$41,000, while the average home in Toronto would need a down payment of over $200,000. This much lower down payment requirement makes getting a mortgage in Ottawa fairly affordable for the average household.

Ottawa and Gatineau will have slightly different mortgage rates and mortgage offerings even though both cities are just across the Ottawa River from each other. The reason is because some lenders will offer different rates in the province of Quebec than they do in Ontario. As well, many lenders may not offer mortgages in a different province, which will mean that the offerings of lenders available to get a mortgage with will be different.

In addition, smaller mortgage sizes in Gatineau because of lower home prices compared to Ottawa will reduce your bargaining power with lenders, making it harder to negotiate down your rate. Although Ottawa and Gatineau will have some discrepancy between mortgage rates, it will not result in a large difference in the overall mortgage rate you do get.

Similar to across Canada, the secret to getting the best mortgage rate in Ottawa is to shop around for the best rate with multiple lenders. This process can start over the internet by researching different mortgage lenders, their products and the rates they offer. From there, meeting with different lenders and negotiating to see what they will be able to offer you in the form of a mortgage can help you to compare offerings more accurately. Especially if a mortgage lender knows that you are looking for the best rate, they may be willing to lower the interest rate they can offer you slightly, in order to close the deal.

Another option if you would prefer to have someone else do the shopping around for you is a mortgage broker. A mortgage broker is a licensed mortgage specialist who can work with a network of different lenders to help find you the best option. Mortgage brokers may also be able to access lenders that you would not be able to on your own, with not all lenders offering the opportunity to transact directly.

Overall, comparing mortgage offerings through lenders yourself and across mortgage brokers will give you the most options to compare and find the best mortgage rate with. After shopping around, you will be in a good position and likely will have saved thousands of dollars in interest costs over your term.

With over 180 Ottawa mortgage brokers and over 800 Ottawa mortgage agents, finding a mortgage broker to help with your mortgage search is easy. Mortgage brokers can especially be helpful if you are new to buying a home, and can help you find a mortgage that is right for your situation. They can also be very helpful if you have a circumstance that is making getting a mortgage difficult, such as:

• A low credit score,
• Insufficient income,
• You are self-employed, or
• You are new to the country

Mortgage agents and mortgage brokers will be very knowledgeable about the different rules, rebates, and incentives available for you when buying a home. This can give you the confidence and peace of mind you may need when conducting what could be the biggest transaction of your life.

In most cases, the interest rate when you renew your mortgage will be higher than if you were to get a new mortgage for purchasing a home. The reason for this is because lenders know that you may be busy, and already are comfortable paying your current mortgage through them. They make it easier for you to renew your mortgage, but may not offer you as attractive of a rate as if you were to purchase a new home through them. If you do not plan on negotiating down your interest rate with your current lender, then shopping around for a better rate to refinance your mortgage is very important. By finding the best refinance rate or negotiating for a competitive renewal rate, you will save money on interest payments and will pay off your mortgage faster.

The current mortgage rates that you are able to get in Ottawa are some of the lowest mortgage rates of all time. As the prime rate across lenders fell with the Bank of Canada cutting the overnight rate to 0.25%, with long term government bonds having some of their lowest interest rates of all time, and with large scale competition amongst lenders, mortgage rates are at very low levels. This is displayed with multiple lenders offering a 5-year fixed mortgage with an interest rate below 2%. These record low interest rates have made taking on a larger mortgage possible for many people, with less interest being paid on each dollar, which has been one of the key factors driving Ottawa’s real estate market boom and the real estate market boom across Canada.

The CMHC, which its full name is the Canadian Mortgage and Housing Corporation, is a government owned corporation that helps make housing affordable to all Canadians. The way the CMHC does this is by providing mortgage liquidity, insuring mortgage loans, helping to build affordable housing, and providing research on the state of the housing market.

Since the CMHC is not a mortgage lender, you are unable to get a mortgage with them. However, if you are getting a mortgage in Ottawa or across Canada and need mortgage insurance because you have a down payment below 20%, you may pay the CMHC to insure your mortgage so that you are eligible to buy a home.

Ottawa has a very competitive housing market currently, due to a lack of housing supply, record low interest rates, people wanting more space as they work from home, and record household savings during the pandemic. As of the second quarter of 2021, Ottawa saw a record number of home sales with 6925 transactions:

This has led to countless bidding wars, offers being placed with no conditions, and homes selling much higher than their asking price. Over time, as potentially more supply of housing inventory comes on the market, Ottawa’s housing market may become slightly less competitive than it currently is.

For all home purchases in Ontario, including in Ottawa, a land transfer tax occurs when the transaction closes. This transfer tax occurs at a marginal rate, meaning the higher the purchase price, the higher the tax amount. Including the cost of land transfer tax will give you a more accurate representation of how much you will need to afford a home so that you can plan your mortgage amount to cover the home's full cost.

Ottawa first time home buyers may be eligible to receive a rebate on land transfer taxes. The Ontario government provides up to a $4000 rebate, meaning that depending on your purchase price, you may not pay any land transfer tax, and at most you will only pay the difference between the land transfer tax incurred and the $4000 rebate. For more information on both land transfer tax and this rebate for first time buyers, see WOWA’s Ontario land transfer tax page.

As multiple offer scenarios continue to escalate prices in Ottawa, with almost 80% of properties selling at higher than asking price, the average residential home price is now $671,755. This is good for a 41% increase year-over-year. The average price of a single-family home is $743,204, up 42%, while the average price of a condo apartment is $427,145, and up 30%. As home prices continue to rise across the Ottawa region, it makes saving a large down payment and getting a pre-approval for a large mortgage amount essential .

The cost of living in Ottawa is similar to other major cities in Ontario. For example, this chart shows the monthly cost for a family of 3 with a young child versus London, Hamilton, and Toronto:

The overall cost of living in the city you're in is important when determining how large of a mortgage you can afford. If the overall cost of living is much lower, it will allow you the flexibility to potentially spend a larger portion of your income on a home purchase, with other living expenses taking up less of your overall income.

As the capital of Canada, Ottawa is home to a large number of government employees, with the Public Service of Canada making up the largest employer in the city. Ottawa is also known for being a technology hub in Canada, with technology companies such as Shopify, Nokia, Adobe, and Hewlett Packard, in addition to countless start-up companies being based in the city. With a large number of good-paying jobs in the region and as many of these companies grow, it will only lead to more demand for housing in the city.

Ottawa’s 2020 property tax rate is 1.0088% of a home's appraised value, which can be paid through your mortgage lender with your mortgage. This is average compared to Hamilton, London, Toronto, and Mississauga:

Property taxes can be very important to consider when you are getting a mortgage because it will impact how much you directly spend on housing. The lower your potential property tax bill may be, the higher the mortgage amount you will be able to afford.