Calgary Mortgage Rates
The "Posted Rates" at Canada's large banks are as much as 4% higher (400 basis points) than preferred lenders (Calgary Mortgage Brokers) for a mortgage with the same terms.
Posted bank rates are always negotiable. For more information on Calgary mortgage rates or to speak with a mortgage broker in Calgary, contact us today.
Calgary Mortgage Information
|Current Best Calgary Mortgage Rates*|
|Term||Discretionary Rate||RBC Posted Rate|
Prime Rate is currently: 2.45%
5 Yr Variable Rate: 0.99%
Gov't of Canada B20 Stress test rate: 4.79%
Call us at (403) 703-2404 or contact us today for more information.
Federal Gov't Announces Lower Stress Test Rate
February 19 2020: Canada's federal government announced yesterday they plan on changing the stress-test rate for insured mortgages effective April 6th this year.
The new stress-test rate will require high-ratio borrowers *less than 20% down* to qualify at 2% more than the 5 year rate their bank is offering.
Lenders anticipate that would mean a revised stress test rate of 4.89%, vs the current 5.19% rate, a qualifying rate roughly 30 basis points lower.
The difference would mean buyers could afford a property worth 3% more ($515,000 vs current $500,000).
It's anticipated that OSFI will adopt the same adjustments for uninsured mortgages April 6th.
Brookfield Buys Controlling Stake in Mortgage Insurer Genworth MI Canada
August 13 2019: U.S. insurance giant Genworth Financial Inc. has agreed to sell 57% of its Canadian mortgage insurance unit to Brookfield Business Partners. The sale is expected to close in the second half of 2019, and is subject to the approval of Canada's minister of finance.
Brookfield will pay $2.4 Billion Canadian for Genworth MI, Canada's largest private-sector residential mortgage insurer.
Genworth is selling the Canadian unit in an effort to overcome regulatory hurdles that have delayed being acquired by Chinese conglomerate China Oceanwide Holdings Group Co.
Bank of Canada Lowers Stress Test Qualifying Rate
July 19 2019: The Bank of Canada has lowered their 5 year posted fixed rate for the first time in three years. This is the rate used to determine if a borrower qualifies for a mortgage.
The five-year benchmark qualifying rate dropped 15 basis points to 5.19%, down from 5.34%.
For the average buyer, this would mean they could spend about $4,000 more on a home.
The 5-year posted rate is based on the mode average of Canada's big six banks posted 5-year fixed rates.
Why are the posted 5-year rates are so much higher than the rates offered for a typical 5-year mortgage? The banks keep their posted rates high in order to magnify their profits on the penalties charged if you break a fixed mortgage early.
Since January 2018, to qualify for an uninsured mortgage, borrowers have been subject to "stress testing" their ability to make payments at rates either 2% higher than their contractual mortgage rate or at the Bank of Canada's 5-year benchmark rate, whichever is higher..
Government's OSFI Moves Ahead With Mortgage Stress Test
Oct 17 2017: OSFI, the federal government's banking regulator, unveiled new mortgage qualification rules today.
They have listed 3 changes, 2 of which are significant:
First, all mortgages, regardless of the Loan-To-Value, are no longer allowed to qualify at the contract rate but instead have to qualify at the higher of a) 2.0% above the contract rate, or b) the government mandated Benchmark Posted Rate which is currently 4.99%.
Currently, if you had 20% down or more, you could qualify at a 5 yr fixed rate of 3.29%. After January 1st 2018, all mortgages will be stress-tested at the higher of 4.99% or your qualifyiing rate + 2%, whichever is higher.
This will reduce your buying power by about 20%. So, if you were qualified for a maximum purchase of $600,000, the new target price range will be approximately $480,000.
Second, no federally regulated lender can arrange a mortgage or secondary funding with a second lender which circumvents the federally mandated rules on loans to value.
This means that a lender cannot bundle a first and second mortgage together in order to get someone who may not qualify traditionally on the "A" lending side a "B" mortgage and get them home ownership. Some lenders have "Bundled" first and second mortgages so as to avoid the federal rules.
Third, there is also a statement regarding lenders evaluation of their "Loan To Value" limits and lending practices. This means tightening up of lender policies and a reduction in exceptions when applying for a mortgage. A tighter "either clients fit the box" or there will be no approval.
These guidelines, which will have an impact on the Canadian housing market, will come into effect on January 1, 2018, although it's likely the major banks will begin rolling it out prior to the new year.
New Proposed Mortgage Rules Could Cut Housing demand by 5-10%
Aug 28 2017: TD Bank suggests that new changes to Canadian mortgage qualification rules could end up cutting housing demand by up to 10%:
CMHC to Increase Mortgage Insurance Premiums
Jan 17 2017: Today CMHC announced effective March 17 2017, homeowner mortgage loan insurance premiums will be increasing.
The increases are due to capital requirement changes OFSI put into effect January 1st to comply with the Government of Canada policy changes this past October.
Government Announces Changes to Mortgage Qualification
October 03 2016: The Government of Canada today announced a policy change for all new high ratio mortgages (those with less than 20% down requiring mortgage insurance).
After October 17 2016 all new insured mortgages will need to qualify or be stress tested at the Benchmark Rate (Bank Posted Rate) of 4.64%, substantially higher than the 2.10 - 2.50% rates currently available to consumers.
Under this new regulation, a substantial number of insured mortgage borrowers will qualify only for 80% of what they did before, depending on debt servicing ratios.
Before and After Mortgage Changes
Before the new mortgage qualification rules, a family that has $100,000 of income who saved $40,000 for down payment could afford a $665,000 property. After the regulations with the same $40K down payment, the family will be approved for a $505,000 property - 24% less.
For more information, see Assessing The Impacts of Changed Mortgage Qualification Criteria
Government Increases Minimum Downpayment
Just a reminder that as of February 15 2016, the Government of Canada has increased the minimum downpayment required on any properties with a purchase price greater than $500,000.
If the purchase price of a home or condo is under $500,000, the minimum 5 per cent downpayment remains in effect. On properties priced over $500,000, the first $500K of financing requires 5 per cent while the remaining portion requires 10 per cent.
Bank of Canada Delays Interest Rate Hikes
(October 21 2015): As expected Bank of Canada Governor Stephen Poloz once again told media the central bank's key overnight lending rate will remain unchanged at 0.5% following 2 cuts earlier in the year.
The bank's outlook for 2016 & 2017 has been downgraded as a result of impact the oil-price shock has had on the Canadian economy.
Despite the U.S. Federal Reserve appearing poised to begin raising U.S. rates, which will push the Canadian dollar lower, our central bank is expected to stay on the sidelines with any rate increase until at least the second half of 2017.
Calgary Mortgage Lenders
It's essential for buyer's who are considering purchasing Calgay property to speak with a local lender who can advise on the currently available mortgage product(s) best suited for their individual situation. We work with a number of experienced lenders and would be happy to refer you should you have any questions.
All Mortgage Penalties Are Not Created Equal
Most people will define a mortgage purely based on the rate they receive, but that's like judging the "best car" by the one with the lowest monthly payment.
Speak to someone who's had to cough up a mortgage penalty or deal with refinance limitations and they can vouch for one thing: Mortgage restrictions can easily outweigh small (e.g., 0.10% to 0.15 %) differences in interest rates. Early payout penalties can be in the ten to twenty-thousand dollar range for a $200,000 - $300,000 mortgage.
It's nearly impossible to predict your refinance needs three or four years out. Statistics show that well over half of Canadians with a mortgage renegotiate before their term is up.
Did you know the average five-year borrower changes their mortgage after just three-and-a-half years?
That's why it often pays to trade a slightly lower rate for more flexibility, unless you absolutely know that you won't change your mortgage during its term. A cheap rate can certainly save hundreds of dollars up front, just be sure you won't be paying thousands later.
Can you break your mortgage any time you want?
- Most lenders let you pay a penalty and get out of a closed mortgage early.
- Some no-frills mortgages only let you out if you sell your property.
- Some don't let you discharge your mortgage at all, until the term is up.
- You'll almost always pay a rate premium for an "open" mortgage with no penalties. If you plan to keep the mortgage for more than six months, you're often better off choosing a lower rate and paying the penalty to get out early (if needed). The more you are borrowing, the more this applies.
If a mortgage penalty applies, how is it calculated?
- Fixed rate penalties are usually three months of interest or the interest rate differential (IRD), whichever is more. This is the difference between what the bank would have made if the mortgage went the full term and how much money they are not getting paid by closing your mortgage rate and the current mortgage market rate.
- Variable-rate penalties are typically 3-months of interest based on your current rate.
- Penalty calculations based on posted rates (i.e. rates higher the rate you actually pay) can sometimes be several thousand dollars more expensive. This method is common at most large banks, and is their single greatest weakness.
- Some lenders get tricky. For example, instead of a standard 3-month interest penalty based on your current rate, some lenders charge 3-month interest penalties based on posted rates. Others charge interest rate differential penalties when 3-month interest charges normally apply. A few even ding you with 12-month interest penalties or penalties equal to 3% of your balance. Avoid such mortgages unless the rate savings is significant.
Can I port my mortgage to a new property to avoid penalties?
- Never underestimate your odds of moving. Look for good porting flexibility, especially if you're young, need job mobility and/or have a growing family.
- Some lenders let you port, but not increase. That forces you to pay a penalty if you buy a pricier house and need more financing.
- Remember as well that that credit unions prevent porting across provincial lines, a problem if you move out of province.
Ask your mortgage professional to explain the differences and make sure your choice is informed and that your mortgage works to your advantage. You will get a great mortgage for now and for the future.
Mortgage Growth to drop 50% Over Next 2 Years
April 28, 2013: RBC Capital Markets are predicting a growth slowdown of as much as 50% in Canadian mortgage growth rates over the next 2 years as home sales & prices cool nationally. Growth is predicted to fall from 5.4% to between 2 and 4% as markets in Toronto. Montreal, Ottawa & Vancouver slow. At the same time, mortgage loan losses will remain low as employment levels continue to be strong.
Canadian banks currently hold 65-70% of the $1.2 trillon residential mortgage market. 65% of residential mortgage debt in Canada is insured through the government's CMHC, as well as Genworth MI Canada Inc and Canada Guaranty Mortgage Insurance Co.
Reuters Poll: Bank of Canada to hold rates until late 2012
November 30, 2011: Results from a Reuters poll released today indicates economists & strategists believe the Bank of Canada will not increase interest rates until the 4th quarter of 2012.
The 4th quarter 2012 view was still much stronger than many primary dealers , who are calling for the next BofC move in 2013 *which is the projected time-frame for the U.S. Federal Reserve to raise rates*.
According to Dawn Dejardins, assistant chief economist at the Royal Bank of Canada, "Even though there is so much uncertainty in the global economy at the moment, Canada's economy still remains in relatively good stead".
TD Predicts Calgary Real Estate to Rise
July 28, 2011: TD Economics predicts Calgary real estate will buck the national trend and see prices rise over next 2 year as the rest of Canada is threatened by a looming price correction. Calgary's market has bucked the national trend since 2007. Most major Canadian centres have eclipsed the peak prices hit in 2007, while Calgary prices have not.
"TD Economics has forecasted that the national average resale price will drop 10.2% over 2012 and 2013. But it looks like Calgary will escape this downward trend largely because it's already gone through much of its correction."
Read the full TD Economics forecast here
Changes to Canadian Mortgage Rules
Jan 17 2011: The government of Canada announced this week three loan financing changes designed to address concerns about increasing levels of household debt.
First, the government will reduce the maximum mortgage amortization period from 35 to 30 years on CMHC insured (high ratio) mortgages. Second, the maximum amount of the value of a home that can be re-financed will drop from 90 per cent to 85 per cent. And finally, government insurance will no longer be available to financial institutions wishing to insure home equity lines of credit (HELOC's).
Together, these three measures are designed to ensure homebuyers invest responsibly in home ownership and don’t risk their financial security by buying too much home for their income or the country’s economic circumstance. It is important to note, the government did not increase the minimum down payment, which was under consideration.
Carney Says Bank of Canada Will Be Careful on Rates With U.S. Slowing
Friday September 10, 2010
The Bank of Canada raised the benchmark interest rate by 25 basis points to one per cent this past Wednesday, a move most analysts expected. The rate hike was in response to what Mark Carney described as "exceptionally stimulative" financial conditions despite the slowing - but still growing - Canadian economy.
Careny told an economic conference in Calgary today that the central bank will be "careful" when considering additional interest rate increases, and would have to consider the implications of slower U.S. growth when making any decisions. “Renewed weakness in the United States could have important implications for the Canadian outlook,” said Carney. “The Bank will have to chart a careful course for Canadian monetary policy.”
Meanwhile, Paul Volker - former Federal Reserve Chairman and current Chairman of President Obama's Economic Advisory Board - told the same conference that it will be years before the U.S. economy fully recovers and global financial systems return to normal.
"The American economy, beginning now, it will take three years or so to get back to previous peaks. That has not been a normal business cycle behavior, normal recovery." He estimated it would take between 3 to 6 years to repair the global financial systems.
Canada raises key interest rate to 0.5%
OTTAWA (Reuters) June 01 2010 – Canada became the first of the G7 major industrialized countries to begin hiking interest rates following the global financial crisis, raising its key rate on Tuesday by a quarter-point to 0.50 percent.
The Bank of Canada gave no guarantee it would continue hiking its overnight target rate, which it had kept at an emergency low of 0.25 percent since April 2009, saying the European debt crisis and uneven global recovery clouded its confidence in a sustained recovery.
“Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," the central bank said in a statement.
After two quarters of robust economic growth in Canada, the bank said activity was broadly in line with its expectations, as was inflation.
The debt crisis in Greece and some other euro zone countries has so far had only a limited impact on Canada through lower commodity prices. But the bank said some countries will now be forced to tighten their budgets quickly and that, combined with debt reduction by banks and households, could slow the pace of global growth.
(Reporting by Louise Egan; Editing by David Ljunggren)
CANADIANS NOT OVERLY CONCERNED WITH INTEREST RATES RISING: Investors Group Survey
(April 29 2010) One-third of Canadian mortgage-holders are not concerned about their ability to make payments if interest rates rise, according to a recent survey by Investors Group, while four in ten respondents said it would take at least a three per cent rate hike before they began to worry.
"Canadians appear to have both feet on the ground through these ups and downs, but everyone needs to ensure their confidence is aligned with reality," said Peter Veselinovich, vice-president, banking and mortgage operations at Investors Group.
The sample's median outstanding mortgage balance was about $130,000. With a 25-year amortization, a three per cent rate increase would add over $200 to monthly payments on that balance, $70,000 over the course of the mortgage, the survey said.
Despite the survey's results, other homeowners are more than willing to part with their property. Nearly 100,000 new listings were posted last month, the busiest March on record according to the CREA. Over 230,000 listings have been added since the beginning of 2010, amounting to the most for any first quarter. However, the number of listings is still down nine per cent nationally from last year.
3 Changes for Canadian Mortgage Industry take effect April 19 2010
(April 7 2010) As I am sure you may have heard, there were a few changes this week in respect to the rules regarding mortgage qualifying. The biggest change is the requirement that all borrowers be qualified at a five-year fixed mortgage rate even if they choose a shorter-term, lower-interest product.
The government also lowered the maximum amount Canadians can withdraw in refinancing their mortgages from 95 to 90 per cent. The government also introduced a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner occupied properties purchased "for speculation."
The reality is that these rule changes will affect less than 10% of the home buying market. CMHC insured rentals carried a very expensive premium surcharge and were not very popular and with the historically low interest rates, variable rate mortgage account for a small fraction of most lenders portfolio’s right now.
As you may have heard, there were a few more CMHC changes this week in respect to the mortgage qualifying:
- All borrowers choosing a fixed rate mortgage with a term of less than 5 Yr and any borrower choosing any variable rate mortgage product will have to qualify on a 5 Yr fixed mortgage rate
- The 5 Yr rate that the lenders must use in establishing affordability is the BANK of CANADA's 5 Yr standardized rate which currently sits at 5.49%
- The government has lowered the maximum amount Canadians can withdraw when refinancing their mortgages from 95 to 90 per cent.
We now also have been told that CMHC will only allow a 50% addback on rental property income and no longer allow the 80% direct offset that is currently allowed. This will affect clients who want to move to a new home and keep the current residence as a revenue property. The current CMHC "Self Employed Stated Income" program is now only eligible for clients whose self employed tenure is less than 3 years.
Please fill out our contact form, or call 403-703-2404 for assistance. anytime you need to know more about Calgary mortgage rates or any property that interests you. When you're ready to take the next step toward purchasing a home, we're here to help.
Return to Home Page - Calgary Real EstateSW Calgary Real Estate Listings SE Calgary Listings NW Calgary Real Estate Listings Contact Jim Sparrow