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Rates in Calgary

Current Mortgage Rates in Calgary

As of Sunday, September 8, 2024, current interest rates in Calgary are for a 5-year fixed mortgage and for a 3-year fixed mortgage. Shop around for mortgage rates to find the best offer.

High interest rates continue to make it hard to qualify for a mortgage. In addition, an influx of residents due to interprovincial migration makes it even more challenging for Calgary residents to afford a home. While it’s almost impossible to predict when rates will come down meaningfully, experts forecast that we should expect a gradual reduction over the next few years. 

Home prices remain high, with CREA reporting that the national average home price decreased 3.9% year-over-year to $724,800 in July 2024. Alberta’s average price increased 8.11% year-over-year to $517,300. As for Alberta’s cities, the average selling price of a home in Calgary increased 8.0% year-over-year to $588,600. In Edmonton, the average home price increased 7.2% year-over-year to $399,700. 

Calgary Mortgage Rate Trends: September 2024

While it’s difficult to predict where mortgage rates will trend, the consensus among experts suggests that we could see rates remain higher for longer. Forecasts suggest we won’t see interest rates return to the neutral rate range of 2 to 3% until the end of 2025.

Bank of Canada Rate Announcement

The latest Bank of Canada (BoC) announcement on September 4th was a policy interest rate decrease to . The decision to decrease rates came as the BoC cited economic activity was soft in June and July; meanwhile, the labour market continued to slow. Continued easing in broad inflationary pressures and excess supply in the economy are putting downward pressure on inflation, leading the Governing Council to lower the policy rate by 25 basis points.

While inflation has eased, the growth in shelter costs, particularly rent and mortgage interest costs, is currently the most significant contributor to total inflation. The Governing Council continues to monitor core inflation numbers when assessing policy rate decisions to ensure there is sustained downward momentum in inflation.

The next announcement will be on October 23rd. Using nesto’s proprietary overnight index swap and forward rate calculation data, bond markets are currently pricing in the probability of further rate cuts. However, without further sustained reductions to core inflation, the Bank may leave the key rate unchanged.

Real Estate Market Update

On August 15th, the Canadian Real Estate Association (CREA) released its July home sales data. The data showed that home sales fell 0.7% between June and July, offsetting some of the gains made in June.

July’s home sales activity reported that new listings increased by 0.9% month-over-month, which was led by an increase in new supply in Calgary. Slower sales and more new listings continue to increase the number of homes available for sale across most of the Canadian housing market. 

Slower sales may likely be the last, as the Bank of Canada’s rate cuts may increase real estate activity. Rate cuts are anticipated to bring some pent-up demand back into the market, with buyers having more housing options than at any point in almost 5 years. Prices have stagnated across most markets except for Calgary, Edmonton, and Saskatoon, where prices have steadily climbed since last year.

CPI Inflation Update

Statistics Canada’s latest inflation data, released on August 20th, showed the Consumer Price Index (CPI) rose 2.5% year-over-year in July, down from 2.7% in June. This month’s slowdown is attributed to slower year-over-year growth in travel tours, passenger vehicles and electricity.

Shelter prices continued to be a more significant driver of inflation in July, up 5.7%, down from the 6.2% recorded for June. Higher interest rates are impacting Canadians’ spending patterns, as they are now spending less on discretionary items and delaying big-ticket purchases. This may be contributing to lower demand as prices for durable goods fell 1.7% in July.

Mortgage Statistics for Alberta

Home prices in Alberta are still well below the national average. However, cities like Calgary and Edmonton are witnessing an influx of interprovincial migration. This is causing an imbalance between available homes and the number of people relocating to the province. It’s expected that this will increase home prices and price many first-time buyers out of the market. Here are some mortgage statistics for the housing market in the province:

• Average home value (as of July 2024): $517,300 (CREA)
• Canadian homeownership rate (as of 2021): 66.5% (StatsCan)
• Number of home sales (as of July 2024): 7,997 (AREA)
• Number of new listings (as of July 2024): 11,080 (AREA)

Mortgage Options in Calgary

Calgary conventional mortgage: Conventional or uninsured mortgages require a 20% or more downpayment. Conventional mortgages have no maximum purchase price with an uninsured mortgage, allowing you to purchase homes valued at more than $1 million. The equity from your downpayment is enough to protect the lender, so mortgage default insurance is not required.

Calgary high-ratio mortgage: High-ratio or insured mortgages allow you to purchase a home with less than a 20% downpayment. High-ratio mortgages are limited to a purchase price of less than $1 million. You will be required to purchase mortgage default insurance to reduce the risk to the lender if you default on mortgage payments. 

Calgary fixed-rate mortgage: Fixed-rate mortgages lock in your interest rate over the term. This provides a set principal and interest payment throughout the term, making the mortgage payments stable and predictable. Should you break the mortgage term early, penalties are calculated based on the higher of 3 months’ interest or the interest rate differential (IRD).

Calgary variable-rate mortgage: Variable-rate mortgages have fluctuating interest rates that change based on the Bank of Canada policy rate. Adjustable-rate mortgages (ARM) are variable mortgages that have payments that immediately adjust with changes to your lenders’ prime rate. The principal remains fixed while the interest increases or decreases in the same direction as prime rates. Variable-rate mortgages (VRM) are variable mortgages with fixed mortgage payments despite changes in your lenders’ prime rate. The principal and interest payments will adjust, with more going to interest and less to principal if the prime rate increases and more going to principal and less to interest if the prime rate decreases. 

What Affects My Mortgage Rate in Calgary

Mortgage rates are priced based on the risks associated with the mortgage, the property used as collateral, and the borrower. The specific mortgage rate you are offered will be based on various personal factors like your credit score, income, capital, downpayment, the purpose of the loan and your loan-to-value (LTV) ratio. Some of the most important determining factors affecting your mortgage rate include:

• Downpayment – Your downpayment will determine your LTV ratio and whether you will be required to purchase mortgage default insurance. Insured and insurable mortgages have better rates as there is lower risk to the lender. These rates apply to properties valued at less than $1 million with amortizations up to 25 years. 
• Amortization Period – With prime lending, the amortization period cannot exceed 30 years on uninsured mortgages (downpayments of 20% or more). Uninsured mortgages typically have higher interest rates to account for the added risk to the lender. On mortgages with less than a 20% downpayment, the maximum allowable amortization is 25 years. 
• Property Usage – Your primary residence, known as owner-occupied, generally has lower interest rates. Investment properties you intend to rent out will typically have higher interest rates. Purchasing a primary residence with a second separate legally registered suite is considered an owner-occupied rental and will have access to the same rates as a primary residence. 
• Mortgage Type – The type of mortgage will affect your mortgage rate. Open mortgages have higher rates due to their flexibility. Refinances have higher rates than renewals and new mortgages. 
• Your Credit Score – The type of lender that approves you for a mortgage will be determined based on your credit score. If you have good to excellent credit, you can typically use prime lending and benefit from the best rates. If you have poor credit, you may need to look at alternative lending solutions with higher rates to offset the lender’s risks. 

First-Time Home Buyer Programs in Alberta

Alberta has a few first-time buyer programs designed to help offset some of the home purchase costs. Some programs are limited to a specific region in Alberta, while others are available across Canada.

• Edmonton First Place Program – This program develops vacant school buildings into townhomes sold at market price and includes a 5-year deferral on the land portion of the mortgage. To apply, you must be a first-time homebuyer in Alberta, be a full-time occupant of the home for the first 5 years, have a combined household income of less than $130,000 and have $25,000 or less in net worth (excluding downpayment, RRSPs, and primary vehicle). 
• Attainable Homes Calgary – This non-profit, owned by the City of Calgary, helps residents with downpayment assistance to purchase a home. To apply, your combined household income must be less than $131,424, you qualify for a mortgage and have at least $2,000 to contribute toward the downpayment, live in the home as your primary residence, and your assets are less than 20% of the homes purchase price to a maximum of $50,000 (excluding your primary vehicle, RESP, RRSP, and pension). 
• First-Time Homebuyers Tax Credit (HBTC) – This federal government program allows first-time buyers to claim up to $10,000 for a maximum $1,500 tax credit to help offset closing costs. 

Land Transfer Tax in Alberta

Alberta does not have a land transfer tax. Instead, you’ll pay a Land Titles Transfer Fee on the property value and mortgage amount. The fees are calculated as follows:

• $50 plus $2 for each $5,000 or portion of property value

And

• $50 plus $1.50 for each $5,000 or portion of the mortgage principal.

Alberta does not offer a rebate on the provincial Land Titles Transfer Fees.

Proposed changes in Budget 2024 would amend the Land Titles Act to alter these fees, raising them to $5 per $5,000 of value for both fee types. 

How to Find the Best Mortgage Rate in Calgary

• Step 1: Understand your credit score:  Check your credit score regularly before looking for a mortgage lender or applying for a mortgage. This will help you immediately identify and report errors that could negatively affect your score. If necessary, improve your credit score to help with your mortgage approval.
• Step 2: Determine your borrowing capacity: To find the right mortgage solution, you must know the amount you can afford based on your income and downpayment. 
• Step 3: Know your mortgage needs: Analyze different mortgage solutions’ features, risks, and costs. Careful research and comparisons of the available solutions can help you choose a mortgage that best meets your immediate and long-term financial needs.
• Step 4: Find a suitable mortgage strategy: Your strategy shouldn’t just be based on the lowest rate available. Get expert guidance to choose the best strategy for your homeownership goals. 
• Step 5: Compare rates and terms: Not all mortgages are created equal. Choosing a lender like nesto can help you compare rates and terms for multiple lending solutions, ensuring you find the best fit. 
• Step 6: Get prequalified for a mortgage: Begin your journey towards homeownership by taking advantage of nesto’s prequalification process for a mortgage. By analyzing your downpayment and financial stability, nesto will provide you with a comprehensive prequalification outlining the maximum mortgage amount you qualify for. This information is crucial as it helps you set realistic expectations and narrow your home search within your budget.