The Best Current Mortgage Rates in Alberta

Average value of new mortgage loans in Alberta (2020–2023)

In 2020, the average size of new mortgage loans increased after the Bank of Canada lowered lending rates. The average loan amount rose from $275,343 in first three months of 2020 compared to $319,728 in the same period in 2022.

By March 2022, the Bank of Canada began raising rates again to combat inflation. Large-scale migration to Alberta coincided with this trend.

Measuring the impact of interest rate changes on borrowing in Alberta

In the first three months of 2023, the overnight rate reached 4.75%, and the average mortgage loan was $310,000. By July 2023, the third quarter of the year, the central bank raised the overnight rate to 5%. That summer in Alberta, the average mortgage loan decreased slightly (roughly 4% year-over-year), despite brisk demand for real estate.

Higher rates reduced the loan amounts people could qualify for, but this also led to higher monthly payments for borrowers, both new and renewing ones.

Housing market outlook for the remainder of 2024: affordability is slowly eroding

In June 2024, the BoC made its first rate cut in four years, reducing rates by a quarter of a percent (0.25%).

The rate cut is expected to further entice out-of-town homebuyers to purchase real estate in Alberta, which could drive prices higher Edmonton, Saskatoon, and Calgary especially.

Average monthly mortgage payment in Alberta (2022-2023)

The Bank of Canada kept interest rates low in 2020 to support the economy during pandemic shutdowns. This helped stoke the economy, and many people entered the housing market during the era of COVID lockdowns. But years of cheap borrowing led to historically high inflation.

Mortgage payments began to climb in 2022 after the Bank of Canada’s first hike (from 0.25% to 0.50%). That year, Canadians would see a total of seven rate hikes.

Housing demand and migration

Pent-up demand for housing helped drive up housing prices in 2022. Alberta also experienced significant migration (both international and interprovincial) that year, resulting in a population growth of over one million people—the highest in Canadian history.

Impact on borrowers

Low interest rates led people to borrow more, resulting in higher monthly mortgage payments.

However, mortgage holders renewing in 2022 faced higher rates, further increasing their monthly payments.

Inflation and payment trends

In 2022, the rate of inflation reached 8.1% in June, a 40-year high. By the end of 2022, the central bank raised rates to 4.25%, and continued to hike rates until it reached 5% in July 2023. This caused the average mortgage payment to increase. Here’s by how much it changed:

• Q3 2022: $1,800
• Q4 2022: $1,856
• Q1 2023: $1,907
• Q2 2023: $1,905
• Q3 2023: $1,977
• Q4 2023: $2,089

By the end of 2023, the average payment increased by a substantial $289 per month.

Alberta’s average payment is closest to the national average, making mortgages more affordable than B.C. and Ontario, but less so than in other prairie provinces and Quebec.

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How to get the lowest Alberta mortgage rates

There are a few things you can do to get the lowest possible mortgage rate.

• Compare mortgage rates - Always comparison shop before you lock into a mortgage term. Comparison websites make it easier than ever to shop around.
• Negotiate for a lower rate -It is possible to negotiate a lower rate with a lender, but it requires some research on your part. Using a rate comparison site can be helpful in this instance. Let the lender know you’ve seen lower rates elsewhere. If they’re unwilling to move on price, they may be able to offer other terms that offset the higher rate.
• Improve your credit score - Having a credit score of over 750 will help you qualify for a preferred rate. It will take time to improve your score if it’s below that benchmark. You can do this by paying off any existing debts and keeping your spending 30% or less than your total credit allowance going forward. Paying your credit card statements on time (and preferably in full) is also key. Also, do not close any credit card accounts; downgrade them to a low or no-fee option instead and use them a few times a year to ensure they remain active. In a joint mortgage, lenders consider the credit scores of both borrowers.
• Get an insured mortgage - High-ratio mortgages often qualify for low rates because they need to be insured by a mortgage insurance (like CMHC, Sagen, Canada Guaranty, among others). Lenders have a guarantee that they will recoup their loan if the borrower ever defaults, which removes risk from the contract. High-ratio mortgages are only available for home under $1 million in Canada. Down payments must be less than 20%, with the cut off being 5% down.
• Choose the right term - The most popular length for a mortgage term in Canada is five years. Five years is the sweet spot for many borrowers in terms of interest rate and principal. Shorter terms tend to have lower interest but high monthly payments. Longer terms (up to 10 years) also charge higher interest rates.
• Reduce your debts - A key interest metric that lender look at is your debt-service ratio. They refer to this to see if you would be able to afford your mortgage payments or if you’re at risk of defaulting. People who have enough income to service their mortgage and pay off any preexisting debts as well as other life expenses are seen as less of a risk.
• Secure a reliable source of income - Mortgage lenders look for applicants that have a strong record of employment. A history of job instability will hurt your chances of approval.
• Watch interest rates - For a decade, Canadians enjoyed a period of ultra-low interest rates. It’s unlikely rates will be that low again (barring a major global event) but it’s still important to pay attention to the Bank of Canada’s interest rate decisions. It will save you money on interest payments in the long run.

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