Fixed-rate mortgages may be losing their popularity among Calgary buyers and homeowners, who are increasingly embracing variable-rate mortgages instead. They have good reason to look at these mortgages with interest rates that rise and fall with the Bank of Canada's policy rate, says Penelope Graham, mortgage expert with Ratehub.ca.
"Variable mortgages tend to be a popular choice right now because the spread between its best rate and the best fixed rate is quite wide," she explains. She further notes that the best variable rate of 3.35% is 69 basis points lower (as of mid-April) than the best fixed offering. "That's a pretty attractive draw for borrowers who are rate sensitive."
Whether it is homeowners now renewing—approximately 1.4 million in Canada are doing so this year—or buyers seeking a mortgage for a purchase, a recent TD Bank survey found about 40% of borrowers are leaning toward variable-rate products. "A lot of people now are looking at their past experience to determine what's going to happen in the future," says Steve Ng, senior district manager for mobile mortgage specialists at TD. "COVID is a good example of when variable rates were quite low, and the fixed rates were higher."
To that end, today's borrowers considering a variable-rate mortgage might expect interest rates to move higher rather than lower. Of course, the direction of interest rates hinges on inflation, which may tick higher, Graham says. "With the onset of the war in Iran, bond yields have already moved up steeply," she says, adding lenders use Government of Canada five-year bond yields to determine fixed-rate mortgage rates. Bond yields often move higher over inflation worries. The outbreak of war caused the price of oil—a key input in many products globally—to soar.
When war broke out, "we observed a significant surge in the popularity of variable-rate mortgages," says Calgary mortgage broker Dan Eisner, chief executive officer of True North Mortgage. Prior to the conflict, approximately one-third of clients opted for variable products; today, about 60% seek a variable rate, he says. "Elevated fixed rates are clearly driving buyers and homeowners to choose a variable-rate product."
That is despite many Calgarians feeling nervous about the economy, interest rates and the housing market, the TD survey suggests. It found three in four Alberta respondents are uneasy about mortgage renewals, expecting higher payments—for good reason, Ng says. Many are likely renewing at interest rates double those with their current term that they locked into five years ago when rates were at historic lows.
Yet Alberta buyers are "cautiously optimistic," he adds. One in four believe they will buy before year's end, indicating lower prices and stable interest rates as key drivers. As well, many surveyed buyers had saved enough for a down payment. Even among those expecting to remain on the sidelines in 2026, TD's survey reveals that seven in 10 of all prospective buyers are saving monthly for their down payment. "The findings show the desire for ownership remains," Ng says, noting higher demand could emerge now that prices have fallen off from recent highs in Calgary. "Now that there's a pause, there might be a sense of now or never."
