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Jamie David, Director of Marketing and Mortgages
As the most populous city in Alberta and the third biggest city in Canada, Calgary holds an important place in the Canadian economy. As with most large cities, Calgary has a thriving mortgage market, offering a range of mortgage products to suit most homeowners or first-time home buyers.
5-year fixed-rate mortgages are the most common type of mortgage in Calgary, so it’s a good place to start comparing your options. Ratehub.ca makes it easy to compare rates from the big banks, credit unions and smaller lenders in Calgary, at no cost to you. Use the tools at the top of this page to get started.
Best mortgage rates in Calgary +
Calgary 5-year fixed mortgage rates: Quick facts
- 70% of mortgages closed in Alberta with Ratehub.ca’s in-house brokerage, CanWise Financial, in 2021 were 5-year fixed mortgages
- 60% of all mortgage requests made to Ratehub.ca in 2021 were for 5-year fixed mortgages
- 72% of Canadians had fixed mortgage rates in 2020 (Source: Mortgage Professionals Canada)
- 5-year mortgage rates are driven by 5-year government bond yields
Historical 5-year fixed mortgage rates in Calgary
Checking out patterns in historical mortgage rates gives you a good idea of whether rates are currently higher or lower than normal, which could affect your mortgage choices. Fixed mortgage rates lock in today's rate for your entire term, which is useful if rates go up. On the other hand, variable mortgage rates will change alongside prime rates, so might be better if rates are likely to decrease.
Here are the lowest 5-year fixed rates for the year in Canada for the last several years, compared to several other types of mortgage rates.
Source: Ratehub Historical Rate Chart
The popularity of 5-year fixed mortgage rates in Calgary
Fixed mortgage rates are by far the most popular rate type in Calgary. This makes a lot of sense, as fixed rates guarantee regular payments for your entire term, which makes budgeting simple. Admittedly, you could miss out on potential savings if the prime rate drops during your term, but steady payments might be worth it.
Across Canada, most mortgages are on 5-year terms, including both fixed and variable rate types. 5-years is right in the middle of the common term lengths available in Canada, which range from 6 months to 10 years. 5 years is generally enough to provide some financial certainty, but not so long that you'll feel locked into a particular mortgage contract if your circumstances change.
It's important not to confuse your mortgage term with your amortization period. Your mortgage amortization is the total life of your mortgage. Most Canadian mortgage amortizations are around 25 years (the maximum for mortgages with a down payment of less than 20%), with 35 years being the maximum. Your term, on the other hand, is the length of time you agree to a particular set of mortgage conditions with a particular lender. After your term is over, you can renew your mortgage with your current provider or a new one.
What drives changes in 5-year fixed mortgage rates?
By and large, 5-year fixed mortgage rates follow the pattern of 5-year Canada bond yields, plus a spread. Bond yields are driven by economic factors such as unemployment, export, and inflation.
When Canada bond yields rise, sourcing capital to fund mortgages becomes more costly for mortgage lenders and their profit is reduced unless they raise mortgage rates. The reverse is true when market conditions are good.
In terms of the spread between mortgage rates and bond yields, mortgage lenders set this based on their desired market share, competition, marketing strategy, and general credit market conditions.
5-Year Fixed Rates vs. 5-Year Bond Yields
From 2000 - Today
Should you get a 5-year mortgage in Calgary?
As with most things in the mortgage business, it depends. While 5-year rates are popular and come with relatively low rates, there are many reasons why you might not want to get a 5-year mortgage.
For example, if you think rates will go up in the coming years, it might be a good idea to lock-in today's rates for longer with a 10-year mortgage. Alternatively, you might need the flexibility that comes with a shorter mortgage term, such as a 3-year or 2-year mortgage.
If you're finding this all a bit confusing, don't worry - you're not alone! Speaking to a mortgage broker or using Ratehub.ca to compare quotes from multiple lenders, can help you better understand your options. That's the first step in making the right choice.
References and Notes
- Trends in the Canadian Mortgage Market: Before and During COVID-19, Statistics Canada, 2021
- Annual State of the Residential Housing Market in Canada, Mortgage Professionals Canada, 2021
For more information, check out these helpful pages!
What are 5-year fixed mortgage rates?
The '5' in a 5-year mortgage rate represents the term of the mortgage, not to be confused with the amortization period. The term is the length of time you lock in the current mortgage rate, while the amortization period is the amount of time it will take you to pay off your mortgage. The term acts like a reset button on your mortgage, at which point you must renew the mortgage at a rate available at the end of the term. So, for example, a typical mortgage has a 5-year term and a 25-year amortization period.
When the mortgage rate is 'fixed' it means that the rate (%) is set for the duration of the term, whereas with a variable mortgage rate, the rate fluctuates with the market interest rate, known as the 'prime rate'. So, for example, if the 5-year fixed mortgage rate is 4%, then you will pay 4% interest throughout the term of the mortgage.
An interesting feature of the 5-year fixed mortgage rate is that all borrowers must meet its standards of approval even if they choose a mortgage with a lower interest rate and shorter term. This benchmark is applied not only to reduce risk for the lender, but to give the borrower some breathing room.
How much can I save comparing 5-year fixed rates?
Your mortgage is likely to be the largest financial commitment you’ll ever make, and getting a better rate can save you thousands over a 5-year term. Even a slightly lower mortgage rate can result in big savings, especially early on in your mortgage.
For example, on a $500,000 mortgage with a 25-year amortization period, a rate of 3.00% would see you pay $69,347 interest over 5 years. With a 2.75% rate you’d pay $63,454 interest over the term. So, a difference of just 0.25% can save you $5,893 over your 5-year term.
Why compare 5-year fixed rates with Ratehub.ca?
We make it simple to see current mortgage rates from all of Canada’s leading mortgage providers in one place. We have rates from the big banks, credit unions and smaller lenders across the country. This makes it easy to see who offers the best rates in Canada in real time, at no cost to you.
Why are fixed rates different to variable rates?
You can think of the difference, or spread, between variable mortgage rates and fixed rates as the price of insurance that mortgage costs will not increase in the next five years, more or less. The advantage of fixed-rate mortgages is that you know exactly how much your mortgage payments will be regardless of whether rates rise or fall. You can, essentially, set it and forget it. This eases the budgeting anxiety that may follow a variable rate mortgage.
When interest rates are low, and the spread between shorter-term rates and the 5-year fixed mortgage rates is less significant, it is typically recommended that you lock in the 5-year rate. The longer term offers stability and, because rates are historically low, the chances of rates decreasing further with a variable rate are greatly reduced.
On the other hand, as is the case with all fixed mortgage rates, there is the potential to pay higher interest when variable rates are low, and, examined historically, variable rates have proven to be less expensive over time.
Are 5-year mortgages better than other mortgage terms?
5-year mortgage terms aren’t necessarily better than other terms. You should pick a term length based on your financial needs and current situation, as well as what rates are on offer. However, 5-year terms offer a good compromise - they’re long enough to provide some stability, but short enough to not lock you in for a long time.
Jamie David, Director of Marketing and Head of Mortgages
Jamie has 15+ years of business and marketing experience. She contributes her mortgage expertise to The Globe and Mail and authors Ratehub’s mortgage and homebuying guides. read more
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