Kurt Woock
Mary FloryNerdy Insight: The best Alberta mortgage rates got a little better on June 5, when the Bank of Canada finally lowered its overnight rate. Variable mortgage rates should soon decline by 0.25% across the country. Current activity in the government bond market doesn’t indicate that any sudden spikes or dips in three- or five-year fixed mortgage rates are on their way. These two popular options are still below 5% at many lenders.
The best fixed and variable mortgage rates in Alberta
Disclaimer: The rates displayed do not include any taxes, fees, insurance, or other additional charges. These rates are estimates and are not guaranteed. The actual rate and loan terms you receive will depend on our partner’s assessment of your creditworthiness, loan amounts, and other relevant factors. Please note that any potential savings figures provided are estimates based on the information you and our advertising partners have provided. Terms and conditions apply.
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Alberta mortgage rate update: June 2024
There’s finally some good news for variable-rate mortgage shoppers in Alberta: On June 5, the Bank of Canada lowered its overnight rate by 0.25%. When the overnight rate dips, so do variable mortgage rates, so the Bank’s rate cut should soon be reflected in lenders’ variable-rate mortgage offers.
Fixed mortgage rates are holding steady in Alberta. As of June 5, 2024, five-year fixed mortgage rates remain below 4.7% at some lenders, while three-year fixed mortgage rates can still be found for around 4.9%.
Recent activity in the government bond market doesn’t indicate that any major fluctuations are waiting around the corner for Alberta home buyers. The yields on three- and five-year bonds have bounced around a bit, but not so much that lenders have adjusted their rates by more than a few basis points here and there.
Historical trend: New mortgage loans in Alberta
The average mortgage rate in Alberta
There’s no single average for mortgage rates in Alberta. Even if you had access to all the current mortgage rates 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.
2024 Alberta mortgage rate forecast
Variable mortgage rates
After the Bank of Canada’s decision to lower its overnight rate on June 5, variable mortgage rates are finally set to drop a bit. A reduction in the overnight rate typically leads to an identical decline in lenders’ variable rates.
How many times variables dip in the last half of 2024 remains to be seen. The Bank of Canada will be cautious about cutting the overnight rate too quickly, which could trigger another rise in inflation. Another two modest cuts by year end is a reasonable expectation.
Fixed mortgage rates
Because they’re driven by lenders’ reactions to activity in the government bond market, fixed mortgage rates can be difficult to predict over the long-term.
Based on bond activity in the latter half of February 2024, for example, lenders could drop their three- and five-year fixed mortgage rates moderately in March, but there weren’t many bargains on offer at the time of this writing.
Fixed mortgage rates could be somewhat lower by the end of 2024, but it’s unlikely that they’ll fall significantly below 5%.
Mortgage calculators to inform your home buying decisions
Alberta housing market update
Average home prices in Alberta
The average residential home price in Alberta was $507,706 in May, according to the Alberta Real Estate Association — 8% higher than last April. Detached homes cost $597,719 on average (+7.8% year-over-year), and apartments cost $296,599 on average (+9.6% yoy). The average residential sale price in specific markets includes:
- Calgary: $562,500 (+10.9% yoy).
- Edmonton: $416,988 (+5.6% yoy).
- Lethbridge: $381,110 (+10.3 yoy).
Alberta home sales and price forecast
Real estate experts predict a more normal real estate market in 2024, though the bar for “normal” is low given the tumult of 2023. Many believe Bank of Canada interest rate hikes — a primary driver behind last year’s affordability crunch — are largely over. But exactly when and how quickly the Bank begins to taper interest rates down remains an important question mark.
A report released by real estate company Royal LePage forecasts home prices increasing about 5% by the end of the year, with most of that increase taking place in the second half of 2024. RE/MAX Canada suggests a more subdued average price increase of less than 1%.
Royal LePage’s report said Calgary will have one of Canada’s hottest markets in 2024, with prices expected to rise 8% by year’s end.
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.
Land transfer taxes in Alberta
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.
Guide to Alberta mortgage rates
Types of lenders in Alberta
Mortgage lenders in Alberta tend to fall into four categories, which include:
- Large chartered banks such as Scotiabank, RBC and TD.
- Credit unions such as Bow Valley Credit Union and connectFirst Credit Union.
- B lenders that work with borrowers with lower credit scores, such as MCAN and Equitable Bank.
- Private lenders, who typically deal with borrowers in need of short-term funding.
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 mortgages
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 and 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 and 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 and 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
The mortgage rate you’re offered in Alberta will be based on two primary factors; one based on the state of the economy and one based on your financial situation.
Economic factors
Variable mortgage rates are influenced by the Bank of Canada’s overnight rate. When the overnight rate increases or decreases, a lender’s prime rate follows suit. Variable mortgage rates are based on a lender’s prime rate, so as the prime rate rises or falls, so do variable rates.
Fixed mortgage rates are determined by activity in the government bond market, particularly the yields on one-, three- and five-year bonds. Fixed mortgage rates follow the movement of those yields.
Your financial situation
Factors specific to you also affect the rates you’re offered. These include:
- 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.
Lenders look for signs of risk when assessing these aspects of your finances. The riskier they perceive you to be as a borrower, the higher the rate they’re likely to offer you.
» 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 encourage lenders to offer you the best mortgage rates. 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.
Factors that affect mortgage affordability in Alberta
A home’s price and the rate you’re offered aren’t the only factors that affect how much mortgage you can afford. You’ll also have to account for the following components, which play a role in all mortgages.
Debt service ratios
Lenders use debt service ratios to determine how much of your income goes toward paying debt. If those ratios are too high, you may not qualify for the mortgage amount you need.
Car loans, credit cards and lines of credit are all examples of debt that require regular payments. Decreasing some of these balances, or relying less heavily on credit, can help you lower your debt service ratios.
The mortgage stress test
You will have to pass the mortgage stress test if you want a home purchase funded by a federally regulated financial institution.
The rules of the stress test say you must qualify for a mortgage at a minimum qualifying rate of either 5.25% or the rate you’re offered plus 2%, whichever is higher. If a lender offers you a rate of 5%, for example, you’ll have to demonstrate you can afford the same mortgage at 7%.
You may be able to avoid the stress test if you apply for a mortgage with a lender that is not federally regulated, like a credit union.
Your down payment
Your down payment is a critically important factor in determining mortgage affordability. The more you can put down, the less you’ll need to borrow. Your monthly mortgage payment will likely be smaller, and you’ll pay less in interest.
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. Once your mortgage term ends, you can pay your loan off in full, renew it or refinance it.
Amortization period
A mortgage’s amortization period is the time it will take to pay off the loan in full. In Canada, the most common amortization period is 25 years. If your down payment is less than 20%, you can’t have an amortization beyond 25 years.
If your down payment is greater than 20%, you may find some lenders willing to offer amortization periods of up to 35 years.
Why would you want a longer amortization period? The longer your mortgage lasts, the smaller your monthly payment will be. You’ll pay more in interest, but that might be a worthwhile trade-off if it helps you keep your home.
How to compare mortgages from Alberta lenders
Compare using APR
The annual percentage rate (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.
Compare similar mortgages
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.
You can also compare mortgage rates in other provinces to get a sense of how the rate you’ve been offered in Alberta stacks up:
Working with a mortgage calculator can help you compare different mortgages in a single place.
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.
Frequently asked questions for Alberta mortgage rates
As of June 2024, you can still find fixed mortgage rates for less than 5% and variable mortgage rates for under 6%. The rate offers you receive depend on factors like your credit score, total debt level and income.
Variable rates finally decreased after the the Bank of Canada reduced its overnight rate on June 5, 2024. They’ll decline further with each rate cut, but it’s hard to know how fast those cuts will come. Fixed mortgage rates will probably hover around their current levels — around 4.75% — for the rest of the year.
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