Quick answer: A commercial mortgage rate in BC is usually built from two pieces: a benchmark plus a lender spread. Fixed rates are typically priced off a Government of Canada bond yield for a similar term, and variable rates off prime. The spread depends on the property type, the loan to value, the debt coverage ratio, the strength of the borrower and the type of lender. Fees for the appraisal, reports and legal work come on top, so always compare the full cost.
When clients ask me for a commercial rate, I ask back: what is the property, and what does it earn? Each loan is priced for its own building. For the basic comparison with home loans, read are commercial mortgage rates higher than residential. This guide goes a level deeper.
How is a commercial mortgage rate built?
- Fixed terms: the base is usually the Government of Canada bond yield for a similar term, often 5 or 10 years, published daily by the Bank of Canada. When yields rise, new fixed quotes rise too.
- Variable terms: the base is the lender's prime rate, plus or minus a margin. Prime follows the Bank of Canada policy rate, which rose by a quarter point to 2.5% on October 28, 2026.
- The spread: the lender's charge for risk, cost of funds and profit. This is where your file makes the difference.
What moves the spread on a commercial mortgage?
Does the property type matter?
Yes. Lenders rank property by how stable the income is and how easily it could be leased or sold again. Multi unit rentals and well leased industrial property usually fare well. Retail and mixed use depend on tenants and leases. Office and special use property often carry wider spreads or lower loan amounts. An owner occupied building is judged partly on the strength of your own business.
How do loan to value and debt coverage affect pricing?
Lower loan to value usually earns a tighter spread. The debt coverage ratio is the property's net operating income divided by the yearly mortgage payments. Strong coverage with moderate leverage prices better than a file stretched on both.
What about the borrower, term and amortization?
Lenders weigh your net worth, liquidity, credit and experience, and most want personal guarantees from the company's owners. A 10 year term is priced off a different yield than a 5 year term, and a shorter amortization lowers risk.
Which lenders offer commercial mortgages in BC?
| Lender type | Usual fit | How pricing tends to compare |
|---|---|---|
| Banks and credit unions | Owner occupied and investment property with solid income | Competitive spreads, strict coverage and guarantee rules |
| Insurance companies and pension lenders | Larger, stable, well leased property and longer terms | Often tight spreads for strong files, with firm prepayment terms |
| CMHC insured multi unit | Rental buildings with at least 5 units | Preferred rates and higher loan to value, plus a premium and fees |
| B lenders and trust companies | Files outside bank rules | Higher spreads and a lender fee |
| Private lenders | Short term, urgent or equity based needs | Highest cost, short terms, usually interest only |
CMHC's standard rental program allows loan to value up to 85% on eligible buildings. For short bridges, see B lenders in BC and private lenders in BC.
How do the bond yield, spread and debt coverage work together?
Here is a worked example with illustrative numbers only, not a quote. An investor buys a mixed use building in Surrey for $2,000,000 with net operating income of $110,000 a year. The lender allows up to 70% loan to value, requires debt coverage of at least 1.25 and uses a 25 year amortization, interest compounded monthly, with a 1% lender fee. The illustrative 5 year bond yield is 3.35%, close to the yield the Bank of Canada published for November 9, 2026.
The building can pay at most $110,000 ÷ 1.25 = $88,000 a year, about $7,333 a month.
| Illustrative scenario | Yield plus spread | Rate, term and APR | Largest loan | Loan to value |
|---|---|---|---|---|
| Strong file | 3.35% plus 2.00% | 5.35% for a 5 year term, about 5.59% APR with the 1% fee | about $1,211,000 | about 61% |
| Weaker file | 3.35% plus 3.00% | 6.35% for a 5 year term, about 6.60% APR with the 1% fee | about $1,101,000 | about 55% |
The 70% limit would allow $1,400,000, but debt coverage caps the loan well below that. One extra point of spread cost about $110,000 of borrowing power, so the down payment grows from about $789,000 to about $899,000. More income, a longer amortization or a lender with a lower coverage requirement can matter more than a small rate difference.
What fees come on top of the rate?
- Lender fee: common on commercial loans and higher with B and private lenders.
- Broker fee: some files carry one, always disclosed in writing before you sign.
- Appraisal: a commercial appraisal, usually ordered by the lender at your cost.
- Environmental report: often required, especially for industrial sites.
- Building condition assessment: an engineer's review, common on larger or older buildings.
- Legal fees: your lawyer and usually the lender's, both paid by you.
- CMHC premium and fees on insured multi unit loans.
Also read the prepayment clause; some yield maintenance penalties are large.
Why are commercial rates priced differently from home mortgages?
Commercial loans are negotiated one at a time, judged on the building's income, and need custom reports and legal work, while a vacancy can cut the income that pays the loan. That shows up in the spread and fees. Commercial mortgages 101 covers the basics.
What are the key takeaways?
- Fixed commercial rates are usually a bond yield plus a spread; variable rates are prime plus or minus a margin.
- The spread depends on property type, loan to value, debt coverage, the borrower and the lender.
- Debt coverage often limits the loan more than loan to value does.
- Fees add materially to the cost, so compare the APR.
Before you sign a letter of intent, let me test your numbers with several lender types. See my commercial mortgage services in BC and how a commercial mortgage broker works, then book an appointment with your rent roll and financial statements.
What other questions do readers ask?
What are commercial mortgage rates based on?
Most fixed commercial rates are a Government of Canada bond yield for a similar term plus a lender spread. Most variable rates are the lender's prime rate plus or minus a margin. The spread or margin reflects the property, the loan to value, the debt coverage and the borrower.
Did the October 2026 Bank of Canada increase raise commercial rates?
It raised variable rates directly. The Bank of Canada lifted its policy rate to 2.5% on October 28, 2026, and prime rose by the same quarter point. Fixed commercial rates follow bond yields, which move with the market rather than on a set date.
What debt coverage ratio do commercial lenders want?
Lenders want the property's net operating income to cover the yearly mortgage payments with room to spare, and the minimum ratio varies by lender, property type and program. I confirm the exact figure with each lender before we apply.
Are CMHC insured apartment loans cheaper?
CMHC insurance for rental buildings with at least 5 units lets approved lenders offer preferred interest rates and, under CMHC's standard rental program, loan to value up to 85% on eligible properties. You pay an insurance premium and fees, so compare the full cost, not just the rate.
What fees come with a commercial mortgage in BC?
Expect an appraisal, often an environmental report and a building condition assessment, legal fees for you and usually the lender, and in many cases a lender fee. Some files also carry a broker fee. Every fee should be disclosed in writing before you sign.
Where do these numbers come from?
- Bank of Canada: policy interest rate (2.5% after the October 28, 2026 increase)
- Bank of Canada: selected Government of Canada bond yields
- Bank of Canada: daily digest, including the prime rate
- CMHC: mortgage loan insurance for multi unit and rental housing
- CMHC: mortgage loan insurance for standard rental housing (5 or more units)
Published November 10, 2026. This article is general information, not personal financial advice. Rates and programs change, and every approval depends on your full application. Asim Ali is a licensed mortgage broker with Dominion Lending Centres A.I.M.I. Collective Mortgage Group.