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Calgary, also affectionately known as “Cowtown,” is Canada’s third-largest city, but also home to the second-highest number of corporate head offices in the country.
Those professional incomes and Calgary’s prominence as a top Canadian city make it a key mortgage market. In fact, high wages in this region explain the city’s larger-than-average mortgages.
Of course, its heavy reliance on the cyclical oil and gas industries means Calgary has seen its share of booms and busts. Lenders are always slightly more conservative in Alberta as a result, particularly when recessions hit the city hard, as they did in 2020.
Still, Calgary is one of the more competitive mortgage markets in the country. That means its residents usually have access to some of the lowest mortgage rates.
Here’s a quick look at Calgary’s key mortgage and housing metrics. *
* Data as of May 2020. Assumes 2.49% rate, down payments as stated, a 25-year insured amortization and 30-year uninsured amortization.
Here’s a look at how Calgary mortgage rates have stacked up over the years with the lowest widely advertised national rates.
The best rates in Calgary are often slightly better compared to mortgage rates in other parts of the province thanks to the number of lenders and brokers in the city, and the liquidity of its real estate market (which reduces lender risk slightly, relative to other parts of the province).
Due to the COVID-19 crisis, mortgage rates in Calgary, like all other parts of the country, have been near record-lows. That’s true even though many people are still unemployed and unable to take advantage of such rates.
Mortgage activity should start to recover by the end of 2021 as the economy fully re-opens, rates remain low and people regain employment. But much depends on the level of oil prices, given the correlation with business investment in the region.
Calgarians have historically been perceived as less-rate sensitive compared to homebuyers in other regions of the country. That’s due to a large percentage of the workforce being blue-collar, high-wage earners in the oil and gas sectors.
But things have changed with the internet making it easier to find the best rates. That’s forced mortgage brokers and lenders to compete harder for mortgage business.
Speaking of brokers, Calgarians have no shortage of options when it comes to mortgage brokerages. The largest traditional broker networks in the city include Dominion Lending Centres, TMG the Mortgage Group and M3 Mortgage Group.
Some of the top deep-discount brokers servicing Calgary include:
The city’s biggest lenders include:
These lenders are all reasonably competitive, but only one can have the best deal at any given time. Fortunately, we track all these lenders, making that comparison easy.
Like most housing markets in Alberta, Calgary’s mortgage market is heavily influenced by the health of the energy sector, primarily oil and gas. The city’s economy is also driven by tourism thanks to its proximity to the Rocky Mountains and its annual Calgary Stampeded rodeo that draws crowds from around the world.
Housing has historically boomed when the oil and gas industry is performing well. But since oil prices plummeted in 2014-15 and 2020, Calgary’s housing market has suffered due to rising job losses. Like most other regions, housing and mortgage demand are expected to remain weak into 2021 before starting to recover in 2021 or 2022.
Compared to more rural communities in Alberta, homes in Calgary are easier to sell and have higher prices. Nonetheless, mortgage underwriters often exercise slightly more caution with Calgary deals given ongoing difficulties in the oil and gas sector, which create risk of defaults, home price weakness and higher losses.
Mortgage default rates in the province stood at 0.52% as of January 31, 2020. Again, much of this is due to lost incomes from the struggling oil and gas industry. By comparison, the default rate was just 0.09% in Ontario and 0.15% in British Columbia.
If you’re a Calgarian in the market for a mortgage, you might be considering a mortgage from your bank thinking the “convenience” of having all your accounts in one place seems appealing. Well, you might want to think again.
These days, roughly 90% of consumer banking is done online and banks no longer have a monopoly on convenience. In fact, you’d be remiss to complete the mortgage process without first comparing rates. There are two key reasons for this: it’s easy, and it can save you a bundle of money.
If you compare Calgary’s best mortgage rate against the worst rate, that difference can span a full percentage point or more. If you took the first offer from your bank at the mid-part of that range, you’d be leaving thousands of dollars on the table given an average size mortgage.
It’s a well-known fact that Canada’s big banks are not the most transparent companies when it comes to pricing mortgages. Getting the best rate in Calgary truly requires legwork and comparison. That said, banks do tend to have lower pricing on uninsured mortgages and HELOCs versus competitors.
One option is to work with a mortgage broker. They’ll shop several lenders for you to find you the best mortgage rate in the city. But keep in mind brokers don’t get paid from all lenders, so they won’t offer a comprehensive market picture.
One thing they can do, if you deal with a competitive one, is use part of their commission to “buy down” your rate. It never hurts to ask a broker to do this in order to win your business.
In general, the best time to shop rates in Calgary is during the busy spring homebuying season. That’s when most lenders offer their sharpest mortgage deals. Just remember: the goal is to minimize your total borrowing costs. That means settling on the optimal combination of the lowest rate and the best flexibility, given your five-year goals.
Engaging a mortgage broker before renewing can help you make a better decision. Mortgage brokers are an excellent source of information for deals specific to your area, contract terms, and their services require no out-of-pocket fees if you are well qualified.
Here at RATESDOTCA, we compare rates from the best Canadian mortgage brokers, major banks and dozens of smaller competitors.