Calgary Alberta Mortgages

Mortgage Rates in Calgary, Alberta

Understanding mortgage interest rates can definitely feel confusing, especially if you’re a first-time homebuyer looking to purchase a home in Calgary. With terms like prime rate, fixed rate, and variable rate thrown around, it’s easy to feel overwhelmed. Hello! I’m Amanda Crowe, a mortgage professional based in Calgary, Alberta. With years of experience helping clients navigate the mortgage process, I’m here to guide you through these concepts. Together, we’ll break down how mortgage interest rates work, what affects them, and how you can secure the best mortgage rates in Calgary for your situation. Let’s dive in!

What Are Mortgage Interest Rates?

Simply put, a mortgage interest rate is the percentage of your home loan that you pay as interest to the lender. It’s essentially the cost of borrowing money to buy a property, expressed as an annual percentage of the loan amount. For example, if you have a $400,000 mortgage with a 3% interest rate, you’ll pay 3% of that balance per year in interest (on top of repaying the principal). These rates can be either fixed or variable, and they’re influenced by a number of factors – including the Bank of Canada’s rates, overall economic conditions, and your personal financial profile‍.
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In Canada, mortgage interest rates are closely tied to the broader economy. Lenders don’t just pick rates at random; they consider how much it costs them to get the funds they lend out, plus a margin for profit. Several key factors go into the interest rate you’re offered, such as:

• The Bank of Canada’s Policy Rate: This is the central bank’s overnight lending rate (the rate at which financial institutions borrow money for one-day loans). Changes in the Bank of Canada’s rate heavily influence short-term interest rates in the market. While the Bank of Canada doesn’t set mortgage rates directly, its policy rate affects the prime lending rate set by banks, which in turn impacts variable mortgage rates
• Economic Conditions: The overall health of the economy plays a big role. Strong economic growth tends to lead to higher interest rates, while weak or slowing economic growth leads to lower rates. For instance, if inflation is rising and the economy is booming, interest rates often increase to curb inflation. Conversely, in a sluggish economy, rates may be lowered to encourage borrowing and investment.
• Lender Competition and Funding Costs: Mortgage lenders (banks or otherwise) consider their own cost of funds. They borrow money from depositors or markets and lend it out as mortgages. If their funding costs rise (say, due to market turmoil or higher rates elsewhere), mortgage rates might rise. If funding costs fall, lenders can offer lower rates. In fact, during certain periods (like early in the pandemic), the Bank of Canada cut its rates but some mortgage rates didn’t fall as much because lenders’ funding costs temporarily spiked due to market uncertainty
• Your Personal Financial Situation: Lenders also look at your financial health. Your credit score, income stability, debts, and down payment all factor into the rate you’re offered. A strong credit history signals to lenders that you’re likely to repay on time, so they may offer you a lower interest rate than someone with shaky credit. On the other hand, if you have a lower credit score or irregular income, the lender might charge a higher rate to offset the perceived risk.

what are fixed vs variable rates?

When choosing a mortgage in Calgary (or anywhere in Canada), one key decision is whether to go with a fixed-rate or a variable-rate mortgage. Each has its pros and cons, and the best choice depends on your financial situation and risk tolerance.

• Fixed-Rate Mortgages: With a fixed-rate mortgage, your interest rate is “locked in” for the entire term of the loan agreement (often 5 years in Canada, though terms can be shorter or longer). This means your rate stays the same – it won’t change at all during that term. The big advantage here is stability and predictability. Your monthly mortgage payment will remain constant, which makes budgeting easier. For example, if you secure a 5-year fixed mortgage at 4.5%, you’ll pay 4.5% interest for those five years, regardless of what happens to market rates. Fixed rates are ideal for folks who prefer certainty. You might choose a 5-year fixed (the most common term in Calgary and across Canada) or a shorter term like a 3-year fixed, depending on your plans and what different lenders offer. Keep in mind that fixed rates are influenced by longer-term economic trends and bond markets – lenders often set these based on the yields of government bonds of similar duration, plus a spread. If it’s expected that interest rates will rise in the future, fixed mortgage rates may be a bit higher today (since lenders are locking in the rate for a longer period).
• Variable-Rate Mortgages: With a variable-rate mortgage, your interest rate can fluctuate over time. Typically, a variable mortgage rate is advertised as Prime ± a certain percentage (for example, “Prime – 0.5%” or “Prime + 0%”). The prime rate is the baseline interest rate that major banks charge their most creditworthy customers, and it moves up and down based on the Bank of Canada’s changes to the policy rate‍. If the prime rate changes, your mortgage rate changes by the same amount. The upside of a variable rate is that if overall interest rates drop, your rate (and monthly payment) can drop as well, saving you interest. Variable rates have historically sometimes been lower than fixed rates, especially in downward rate environments. However, the risk is that if rates rise, your rate (and payments) will increase. For example, if the Bank of Canada hikes rates, banks may raise the prime rate, which means your variable mortgage interest cost goes up. Most variable mortgages in Canada either adjust the payment when rates change or keep the payment the same but adjust how much goes toward principal versus interest. It’s important to be comfortable with this uncertainty – you need to budget for the possibility that your payments could increase.

Which to choose? It really depends on your situation. In a stable or falling rate environment, a variable-rate mortgage can save you money (and you can often convert to a fixed rate later if needed). In a rising rate environment, locking in a fixed rate provides peace of mind. Some homebuyers even consider hybrid mortgages (part fixed, part variable) or shorter terms if they expect changes soon. The key is understanding your own comfort with risk and staying informed about where rates are headed.

What are the Current Mortgage Rates in Calgary, Alberta?

As of the current date, mortgage rates in Calgary are higher than the historic lows we saw a couple of years ago, but they remain competitive among lenders. It’s important to note that there isn’t a special “Calgary-only” interest rate – mortgage rates in Calgary are largely influenced by national factors, like the Bank of Canada’s rate and the overall Canadian bond market. However, local competition among lenders (big banks, local credit unions, and mortgage brokers) can influence the offers you’ll receive in Calgary.

What is the prime interest rate in Calgary?

At present, the prime lending rate in Canada (set by major banks, influenced by the Bank of Canada’s overnight rate) is around 4.95% (this is an example figure as of mid-2025). This prime rate is crucial because variable mortgage rates are typically expressed in relation to prime. For instance, if you have a variable mortgage at Prime – 0.50%, and prime is 4.95%, your current mortgage rate would be 4.45%. When the Bank of Canada adjusts its policy interest rate (it holds eight scheduled announcements per year to potentially change rates), the prime rate usually moves in lockstep. If the Bank of Canada raises rates, prime will likely increase; if it cuts rates, prime should decrease. So, keep an eye on news from the Bank of Canada – it directly impacts how much interest you’ll pay on a variable mortgage.

What Affects Mortgage Rates in Calgary?

Several factors determine the mortgage rates you’ll be offered and the direction of interest rates in general. Many of these factors apply nationwide, but they’re very relevant to anyone seeking a mortgage in Calgary. Here are the key things that affect Calgary mortgage rates:

• Bank of Canada’s Policy and Prime Rate: The Bank of Canada’s policy interest rate is perhaps the most important factor. When the Bank of Canada raises or lowers its overnight rate, it triggers changes in the prime rate that banks charge. The prime rate is the basis for most variable mortgages. So, if the Bank of Canada announces a rate hike (to combat inflation or cool the economy), variable mortgage rates will rise, usually within days. Conversely, if there’s a rate cut (to stimulate a weak economy), variable rates will drop, making mortgages cheaper. Fixed rates can also be indirectly affected, as bond markets adjust to the outlook for inflation and economic growth. In short, the Bank of Canada’s decisions on interest rates set the tone for all lending rates in the country
• Overall Economic Conditions: Broader economic trends – both in Canada and globally, play a big role in interest rates. Inflation is a key driver: if inflation is high or rising above the Bank of Canada’s 2% target, interest rates tend to increase (or markets expect them to increase) to tame price growth. Employment levels, wage growth, and GDP growth also matter. In general, strong economic growth leads to higher interest rates, and weak growth leads to lower interest rates. For example, during economic booms, demand for credit increases and the Bank of Canada often hikes rates; during recessions or crises, the Bank cuts rates to encourage borrowing. Global factors can influence Canadian rates too – events in the U.S. or overseas (like U.S. Federal Reserve rate changes or global financial conditions) often have an impact on Canadian mortgage rates. Calgary has its own local economic influencers as well, such as the oil and gas industry; a booming oil sector can improve the local economy and housing demand, whereas a downturn can have the opposite effect‍, potentially influencing how aggressive lenders are in Calgary’s market.
• Competition & Lender Type: The type of lender and the level of competition in the Calgary mortgage market can affect rates. Major banks, local banks, credit unions, and alternative lenders all want to win customers. In a city like Calgary where the housing market is active, lenders might offer promotional rates to attract borrowers (especially for larger loan amounts associated with higher home prices). Some lenders might be more competitive on certain terms (one bank might have a great 5-year fixed special, another might offer a better variable rate). Also, mortgage brokers often have access to wholesale rates or limited-time specials from lenders that are not advertised publicly. All this means the “lowest mortgage rate in Calgary” at any given time might not be found at the big bank you walk into – it could be with a smaller lender or through a broker. The good news is, Calgary’s market generally has plenty of options, and lenders know borrowers can compare, so they strive to offer attractive rates.
• Your Credit Score and Financial Profile: Your personal creditworthiness has a big impact on the rate you’re offered. Lenders assess the risk of lending to you: a higher credit score and solid financial history will typically earn you a lower interest rate, because the lender is confident you’ll pay them back. On the other hand, if your credit score is low or you have a history of late payments, lenders might only approve you at a higher rate (or require conditions like a co-signer) to compensate for the risk. Similarly, your income stability (steady job vs. self-employed with fluctuating income), your debt levels, and the size of your down payment can influence the rate. For example, if you’re borrowing a very high percentage of the home’s value (say 95% loan-to-value, which requires mortgage default insurance in Canada), you might actually get a slightly lower rate in some cases because an insured mortgage poses less risk to the lender (the insurance covers them). Conversely, if you’re looking at a unique property or a very large mortgage that falls outside normal lending guidelines, a lender might charge a premium. Bottom line: maintaining a good credit score and healthy finances gives you more bargaining power to get the best rate.
• Loan Amount and Term: The size of your mortgage and the term length can also affect the rate. Some lenders offer price breaks for certain mortgage sizes (for instance, high-value mortgages might get a small discount, or very small mortgages might have a slight rate premium). The term length (how long your rate is fixed or how often it’s renegotiated) matters too. Generally, shorter-term mortgages (like a 1-year or 2-year fixed) can have lower rates than longer 5- or 10-year terms, because the lender is only guaranteeing the rate for a shorter period (less risk of future rate changes). However, you should not just chase a slightly lower short-term rate if it doesn’t fit your situation – think about where rates are headed and when you’ll need to renew. Many Canadians stick with the 5-year term as a balance of stability and rate, but it’s worth comparing. If you are comfortable with possibly renegotiating sooner, a 3-year fixed or a variable term could save you money if rates drop in the near future.

(And remember: My services are free to you – as a mortgage professional, I’m paid by the lender. I’ll take care of the hard stuff, like comparing rates and negotiating, so you can focus on the exciting part – shopping for your dream home!)

What Happens When Interest Rates Drop?

• Prime Rate Drops: If the Bank of Canada announces a rate cut, typically the banks will lower their prime rate by the same amount within a few days. For example, if the BoC cuts the overnight rate by 0.25%, banks might reduce prime from, say, 6.70% to 6.45%. For anyone with a variable-rate mortgage or a HELOC, this is good news – your interest rate will drop by 0.25% as well (assuming your mortgage is Prime +/– a constant). That means your monthly interest expense goes down, and more of your payment might go toward principal or your required payment might decrease on the next adjustment. Essentially, a drop in rates directly lowers borrowing costs for variable-rate loans
• Fixed Mortgage Rates May Fall: When the outlook is that rates are dropping (or if the bond market has already priced in a rate drop), fixed mortgage rates often come down too. Sometimes lenders will reduce fixed rates in anticipation of a central bank cut, or shortly after one. If bond yields fall (which they often do when investors expect lower inflation and slower growth), new fixed-rate mortgages become cheaper. This can take a little longer to play out than the immediate prime change, but you might see mortgage rate comparison sites updating with slightly lower fixed rates in the days and weeks after a significant rate drop. For instance, if the Bank of Canada made a surprise large cut, you could see 5-year fixed rates that were 5% drop to 4.7% or 4.5% as lenders reprice their offers to reflect cheaper money costs.
• Housing Market Impact: Lower interest rates increase affordability. When rates drop, qualifying for a given loan amount gets a bit easier (since the mortgage stress test in Canada uses the higher of the benchmark or your contract rate + 2% to qualify – a lower contract rate lowers the bar slightly). Buyers might find they can afford a little more house, or that the same house now comes with a lower monthly payment. This often stimulates homebuyer demand. In a city like Calgary, if rates were to drop significantly, you might see more buyers entering the market, potentially giving a boost to home sales and even prices. On the flip side, when rates were rising, some buyers had to step back or lower their budgets, which cooled the market. So, rate drops can be a relief for the real estate market and are generally welcomed by home shoppers.
• Existing Homeowners: If you already own a home with a fixed-rate mortgage, a drop in interest rates doesn’t change your current payment (since you’re locked in for the term). However, it can present an opportunity. Some homeowners choose to refinance their fixed-rate mortgage early to take advantage of lower rates – but be careful, there can be penalties for breaking a mortgage early. You’d need to weigh the interest savings versus the penalty. If the drop is big enough, it sometimes is worth it; often though, people just take advantage of lower rates when their renewal time comes. If you’re on a variable rate mortgage, as noted, you’ll likely feel the benefit automatically with a lower rate. This was evident in early 2020: as the Bank of Canada slashed rates in response to COVID-19, variable mortgage holders saw their rates and payments drop quickly (providing some breathing room during a tough economic time). Meanwhile, fixed rates also fell to historic lows, allowing many to refinance or lock-in cheaply.
• Saving Money on Your Mortgage: The primary benefit of a rate drop is interest savings. For example, suppose you have a $400,000 mortgage at 5% interest. If rates drop and you end up at 4.5%, that 0.5% difference saves you about $2,000 in interest in the first year alone. Over a 5-year term, that could be around $10,000 saved in interest (rough estimate, not accounting for balance changes). So, rate drops can be quite significant for your wallet. It also can free up monthly cash flow – your payment might be recalculated lower, or if you keep the payment the same, more goes to principal, helping you pay down your mortgage faster.

If you’re actively house hunting or approaching a mortgage renewal when rates are dropping, it’s a great idea to stay informed. Rate changes can happen quickly. Consider getting a pre-approval with a rate hold from a lender – this can lock in a rate for you for up to 90-120 days. If rates drop further, many lenders will accommodate the lower rate, but if they suddenly rise, you’re protected by the rate hold. Essentially, you get the best of both worlds.

To answer the question “how much did interest rates drop today?” – I would look at the latest Bank of Canada announcement or news releases. The Bank of Canada typically announces changes in increments of 0.25% (25 basis points). Sometimes larger cuts (0.50% or more) have occurred in emergencies. These are well-publicized. You can always find the current policy rate on the Bank of Canada’s official site or credible news outlets, and they’ll usually state the change (e.g., “Bank of Canada cuts rate by 0.25%, from 2.75% to 2.50%”). The resulting prime rate change is usually communicated by major banks through press releases on the same day.

In summary, when interest rates drop it generally benefits borrowers: new mortgages become cheaper, variable-rate holders see immediate relief, and even fixed-rate shoppers get better deals. It’s important to remain proactive during such times – you might save money by refinancing or securing a low rate for your upcoming purchase. Keep an eye on official announcements and work with a professional who can quickly help you capitalize on falling rates. As always, I monitor these changes closely – if there’s a notable rate drop and you’re my client (or even if you’re not yet!), I’ll make sure you know your options to take advantage of it.