How Mortgage Rates Are Shaping Land Prices in Vancouver

Stable mortgage rates, economic uncertainty, and housing demand shape land development opportunities.
Discover effective strategies to maximize property value in today’s interest rate environment.

Mortgage rates play a pivotal role in the real estate market, and understanding their impact is essential for landowners. In Vancouver, where land is scarce and demand for housing remains high, the latest mortgage rate forecast from the BC Real Estate Association offers valuable insights into what the future holds for land prices and development opportunities.

Here’s what you need to know about current mortgage rate trends and how they could influence the value of your property.

What’s Happening With Mortgage Rates?

According to the latest forecasts, both variable and fixed mortgage rates are expected to stabilize in 2025:

• Variable Rates: Anticipated to hold steady at 4.45%.

• Five-Year Fixed Rates: Projected to remain at 4.6%.

This stability follows a period of significant fluctuations as the Bank of Canada works to balance economic growth with inflation control. While these rates provide predictability, uncertainty remains due to potential trade policy changes in the United States.

What This Means for Landowners: Predictable financing conditions make it easier for developers to plan new projects. This could increase demand for development-ready land, particularly in high population growth areas like Vancouver.

Economic Outlook and Its Impact on Land

The broader economic environment also influences land prices:

• GDP Growth: Slowing growth and rising unemployment have created some economic headwinds, though Canada is avoiding a full-blown recession.

• Inflation: Moderating inflation signals a more stable economic landscape, but high shelter costs continue to put pressure on housing markets.

• Trade Risks: Potential U.S. tariffs on Canadian exports (ranging from 10% to 25%) could negatively impact GDP and create economic uncertainty.

Vancouver-Specific Insights: Despite economic challenges, Vancouver’s land market remains resilient due to limited availability and strong housing demand. Properties that can be upzoned or redeveloped for higher-density housing will likely retain strong value, even in uncertain times.

Interest Rate Cuts Could Drive Development

The Bank of Canada is hinting at further interest rate cuts in early 2025, potentially lowering the overnight rate to 2.5%-2.75%. This would reduce borrowing costs for developers, making larger and more ambitious projects feasible.

What This Means for Landowners: Lower interest rates could spark renewed interest from developers, particularly for land parcels suited to multi-family or mixed-use projects. If your property has potential for redevelopment, this could be the ideal time to prepare it for sale.

Opportunities for Landowners in Vancouver

Landowners in Vancouver are uniquely positioned to benefit from these market conditions. With housing affordability at the forefront of municipal discussions, there may be increased incentives for higher-density development. This is especially relevant for properties located within transit-oriented or urban growth areas.

Actionable Steps

1. Evaluate Your Land’s Potential: Engage with real estate professionals to assess opportunities for rezoning or densification. Properties with development potential will be in high demand as housing pressures persist.

2. Monitor Policy Changes: Stay informed about municipal initiatives that encourage higher-density housing. These can significantly boost your property’s value.

3. Position Your Property for Sale: With mortgage rates stabilizing and demand for housing remaining strong, this could be the right time to bring your property to market.

The Bottom Line

While mortgage rate stability and falling interest rates create favourable conditions for development, broader economic risks like U.S. trade tariffs remain a potential disruptor. For Vancouver landowners, the key to success lies in staying proactive. Whether it’s preparing your property for redevelopment or leveraging zoning opportunities, aligning with the market’s needs can maximize the value of your land.

If you’re ready to explore how these market dynamics could benefit your property, reach out to a trusted land brokerage expert. With the right strategy, you can position your land for maximum returns in today’s evolving market.

Further reading: 2025 BCREA Mortgage Rate Forecast