Nerdy Insight: It’s a challenging time to buy a home in Alberta. Fixed and variable rates have been ticking up all year, and a lack of available homes for sale have generally kept prices elevated.
Best Alberta fixed and variable mortgage rates
Mortgage Type
Purchase Price
Down Payment
Rate Type
Province
Mortgage Term
Lender |
Lender Highlights |
Rate |
Payment |
Term |
|
|---|---|---|---|---|---|
RFA |
|
5.29%
Fixed |
$2,707
Monthly |
5 yrs.
Term |
Explore Now |
MCAN |
|
5.64%
Fixed |
$2,801
Monthly |
3 yrs.
Term |
Explore Now |
Equitable Bank |
|
6.10%
Variable |
$2,927
Monthly |
5 yrs.
Term |
Explore Now |
Radius Financial |
|
6.15%
Variable |
$2,941
Monthly |
3 yrs.
Term |
Explore Now |
B2B |
|
6.44%
Fixed |
$3,022
Monthly |
1 yrs.
Term |
Explore Now |
B2B |
|
5.44%
Fixed |
$2,747
Monthly |
5 yrs.
Term |
Explore Now |
Disclaimer: These rates do not include taxes, fees, and insurance. Your actual rate and loan terms will be determined by the partner’s assessment of your creditworthiness and other factors. Any potential savings figures are estimates based on the information provided by you and our advertising partners. Mortgage Brokerage Licensed in ON #12984, BC #X301004, MB and AB. Homewise can pursue mortgage brokering activity in SK, NL, NS and NB.
Data source:
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The average mortgage rate in Alberta
There’s no single average for mortgage rates in Alberta. Even if you had access to every rate being offered by lenders in Alberta, it wouldn’t be much help when you’re mortgage shopping. That’s because the mortgage offer you receive is always specific to you and takes into account multiple factors like your credit score, the type of mortgage you want and the amount you need to borrow.
Think about the “average mortgage rate” the way you would Alberta’s average home price. It’s interesting data to have, but it’s not necessarily relevant to your own home buying journey.
Historical trend: New mortgage loans in Alberta
Alberta mortgage rate forecast 2023
Fixed mortgage rates
Some mortgage analysts expect fixed rates to keep rising in the third quarter of 2023 before edging down slightly by the end of the year.
Because fixed mortgage rates in Canada are partly determined by movements in the Canadian bond market, they can be hard to predict. But keeping an eye on bond yields can sometimes tell you which direction certain fixed mortgage rates are heading. Declining yields on five-year government bonds, for example, usually indicate that five-year fixed mortgage rates may dip in the near future.
Variable mortgage rates
The interest rate for a variable-rate mortgage follows any rise and fall in your bank’s prime rate. As a result, the amount of interest you pay can change from year to year, or even month to month. If rates fall, you’ll pay less in interest, but if rates rise, you’ll pay more. Because a variable-rate mortgage is riskier than a fixed-rate one, variable rates are lower compared to fixed rates with otherwise comparable terms.
People with existing variable-rate loans have seen their rates rise multiple times recently because the Bank of Canada has been raising rates to combat stubborn inflation — and when the BoC raises their rates, bank prime rates rise, too. The BoC likely won’t relent until inflation rates are closer to 2%. Variable rates will likely stay elevated into 2024.
Bank of Canada July 2023 announcement
- Rates keep rising. The Bank of Canada increased its overnight rate another 25 basis points to 5% on July 12. It could take months for the Bank to lower it. Whenever it does, expect a minimal decline.
- Homeowners with existing variable-rate mortgages feel the pinch. Since March 2022, variable rates have gone up 10 times — and 475 basis points.
- Don’t forget about the stress test. If you’re offered a mortgage rate of 6.5%, for example, the mortgage stress test requires you to also qualify for a 8.5% rate.
Alberta housing market update
A shortfall of new listings — down 13.5% from last year, according to the Alberta Real Estate Association — led to an overall rise in Alberta home prices. The average residential price in June, $468,519, was 3.6% higher than in June 2022.
Much of that increase was due to sales activity in Calgary, where the average price rose 7% year-over-year to hit $552,273.
Alberta home prices and sales forecast
Home prices are likely to be stable through the rest of 2023, according to real estate company Royal LePage, as limited supply offsets recent rises in interest rates.
Those hoping for a dip in prices may be disappointed. When it appears that the Bank of Canada’s rate hikes are over, experts at RE/MAX Canada expect prices to climb again — largely due to a continued shortage of available housing.
Guide to Alberta mortgage rates
Types of lenders in Alberta
A lenders. Big banks and credit unions are A lenders. You’ll need a strong credit score and to undergo a mortgage stress test before being offered a loan. Because borrowers must meet more stringent requirements, they’ll receive the best rates currently available.
B lenders. Some smaller Canadian banks and mortgage investment corporations, including Canadian Western Trust, Home Equity Bank and Home Trust, do business with people who have poorer credit scores or limited credit history. Rates are higher as a result.
Types of mortgages in Alberta
Fixed-rate mortgages. With a fixed mortgage, the interest rate stays the same for the duration of the mortgage term, even when the market fluctuates. Fixed rates typically:
- Tend to be higher than variable interest rates.
- Can provide a greater sense of certainty because they remain the same for the length of the mortgage term.
Variable-rate mortgages. Variable mortgage rates can increase or decrease throughout the length of your term, depending on your lender’s prime rate. Variable-rate mortgages typically have rates that:
- Are lower than fixed rates, and historically, they’ve been known to save borrowers money over the length of their mortgage — if rates remain the same or fall.
- Can increase, sometimes significantly, throughout a mortgage term. When interest rates go up, the monthly payment on a variable-rate mortgage can become more expensive.
» MORE: The difference between fixed- and variable-rate mortgages
Hybrid-rate mortgage. For these mortgages, one portion of your mortgage is subject to a variable rate and the other portion is at a fixed rate of interest. These mortgages:
- Can help moderate the impacts of fluctuating interest rates in a particularly turbulent or uncertain economy.
- Tend to be more difficult to transfer between lenders.
Insured vs. uninsured mortgages. You must insure your mortgage if you’re buying a home under $1 million with a down payment of less than 20%. Mortgage insurance adds to the cost of your loan. The amount you’ll pay is a percentage of your mortgage amount, and the percentage depends on your down payment — the closer it is to 20%, the smaller the percentage is.
Homes worth $1 million or more require a minimum down payment of 20%, so insurance is not required.
Short-term vs. long-term mortgages. Short-term mortgages are those that are five years or less, while long-term mortgages are those that are over five years. Shorter mortgage terms mean you need to renew your contract sooner, which can also provide flexibility. Plus, short-term mortgages often have lower interest rates than long-term mortgage rates.
Closed vs. open mortgages. The main difference between closed and open mortgages is that you can pay off an open mortgage whenever you like and not pay a penalty; if you make additional payments on a closed mortgage, you’ll generally be penalized.
Closed mortgages often offer better rates than open mortgages. But open rate mortgages may be a good option if you think you may be able to pay off your mortgage early.
» MORE: Understanding open and closed mortgages
How Alberta lenders determine mortgage rates
Alberta mortgage rates fluctuate constantly.
The two main economic factors affecting mortgage rates are the Bank of Canada’s overnight rate, which influences variable rates, and the bond market, which helps determine fixed rates.
There are also factors specific to you that affect the rates you’re offered, including:
- Your credit score.
- Your income.
- Your total debts.
- The loan type you choose.
- The amount you’re borrowing.
- The term length and amortization period of your loan.
» COMPARE: Current Mortgage Rates in Calgary, Alberta
How to qualify for a lower mortgage rate in Alberta
While some factors that affect rates are beyond your control, there are things you can do to possibly qualify for a lower mortgage. For example, you can:
- Improve your credit score. To start, pay down any outstanding debt and pay off every bill in full. A higher credit score generally results in better offers.
- Increase your income. This isn’t always easy, but any additional income will improve your financial position. Lenders look at your income to assess your ability to afford a mortgage.
- Decrease your total debts. Pay down any personal loans, student loans or other types of debts. Lenders consider your total debt load when determining the details of your loan.
- Consider all your options. See if adjusting the loan type, the term length or the amortization period of your loan could help.
How to compare mortgages from Alberta lenders
Compare the annual percentage rate (APR) instead of the interest rate alone. The APR includes the interest rate, as well as any fees and other closing costs the lender charges. The APR is the most accurate way to compare how much different mortgage offers will truly cost you.
Be sure you’re comparing the same type of mortgage. For a comparison to be useful, the mortgages should have the same term, amortization period and payment frequency.
Other aspects to compare when looking for the best mortgage rates in Alberta include:
- Mortgage type.
- Ease of application.
- Prepayment penalties.
- Customer service.
- Any other fees not included in the APR.
Mortgage shopping is about more than just the rate
A low mortgage rate is usually a primary objective for buyers, but getting the lowest rate doesn’t necessarily mean you’re getting the best mortgage for your needs.
For example, you might opt for a fixed rate, which has a higher rate than a variable rate, if you’re uncomfortable with the risk of rates rising.
Or, if you expect to come into a sizable sum of money soon (via an inheritance, for example), paying a higher rate for an open mortgage, which allows you to pay it off early without penalties, could be worth it.
Factors that affect mortgage affordability in Alberta
Mortgage term
The term is the length of time your mortgage contract is valid. In Canada, mortgage terms can run anywhere from six months to as long as 10 years.
Chances are that your mortgage will have multiple terms during the amortization period until you pay it off in full.
Amortization period
A mortgage’s amortization period is the length of time it will take to pay off the loan in full. The most common amortization period in Canada is 25 years. In fact, if your down payment is less than 20% of a home’s value, you’re not allowed to exceed an amortization of 25 years.
Depending on the lender, if you can provide a down payment greater than 20% you may be able to secure an amortization period of up to 35 years.
One option is to ask for the shortest amortization period possible, which means paying less interest overall and potentially saving thousands of dollars. A shorter amortization period, however, will result in higher monthly payments.
Alberta land transfer tax
Unlike other provinces, Alberta doesn’t have a land transfer tax.
The government does charge a fee to process the transfer of the property title: a $50 base fee plus $2 for every $5,000 of the sale price. So, a $400,000 home would cost $210.
Alberta first-time home buyer programs
Some first-time home buyers in Alberta can take advantage of assistance programs offered by both regional and government programs. For example, Attainable Homes Calgary (AHC) helps people with a household income of up to $131,424 fund a down payment. If you sell your home later, you repay AHC the loaned amount plus a portion of any equity appreciation.
Frequently asked questions for Alberta mortgage rates
As of August 2023, you could still find fixed mortgage rates for less than 5.5% and variable mortgage rates for under 6.5% for a home purchase price of $400,000 and a down payment of 10%. The rate offers you receive depend on factors like your credit score, total debt level and income.
Variable rates will remain at their current level until the Bank of Canada reduced its overnight rate. That may not happen until well into 2024. Fixed mortgage rates might soften somewhat before the end of 2023, but significant decreases may not materialize until next year.
Alberta Mortgage Payment Calculator
Use this free Alberta mortgage calculator to estimate your monthly mortgage payments, and see how rates and amortization affect total cost over time.
What First-Time Home Buyers In Alberta Need to Know
There are several incentive programs available for first-timers in Alberta. Combined with some thoughtful planning, this assistance can improve your chances of landing that elusive first home.
Clay Jarvis
Mortgage Affordability Calculator
Use this mortgage affordability calculator to estimate how much house you can afford. See how budget, down payment, and debt ratios affect mortgage affordability.
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