Edmonton Mortgage Rates: What You Need to Know About Rising Rates

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Photographer: Towfiqu barbhuiya | Source: Unsplash

Typical seasonal trends as well as rising interest rates have predictably cooled the Edmonton real estate market. In an effort to reduce sky-high inflation, the Bank of Canada has increased lending rates from near-zero to 3.25% (as of September 2022) with additional increases expected. Homebuyers and sellers want to know how this will impact Edmonton mortgage rates and the real estate market overall?

Edmonton real estate returns to more typical, stable market

While the crazy hot market was a wild ride for buyers and sellers over the past few months, the current outlook for the Edmonton market is not all doom and gloom.

Single-family homes under $500,000 continue to be in demand and are still in a mild sellers’ market. Home prices, particularly single-family house prices, remain stable and are expected to increase in value reasonably year-over-year.

The economic forecast is calling for excellent job growth and economic growth in Alberta, which will continue to draw migration into the province. Edmonton is expected to continue to show stability with more upward growth potential than other cities in the country. Homebuyers now have a good supply of homes to choose from and won’t feel pressured to buy quickly or worry about a bidding war.

All-in-all, despite higher mortgage rates, the outlook for Edmonton’s real estate market is quite good.

Higher mortgage rates reduce purchasing power and increase monthly expenses

Source: Mortgage Sandbox Calculation
Note: Assumes a 25-year amortization

The unfortunate reality of rising mortgage rates is that consumer borrowing power is reduced compared to what it was when rates were at record lows. For those looking to buy, they’ll need to adjust their budget to reflect higher borrowing costs.

Likewise, for those who are renewing a mortgage in the near future, they’ll need to prepare for an increase in monthly expenses. Even a 2% increase in mortgage rate can make a difference of hundreds of dollars a month.

Lock in a mortgage rate ASAP

Homebuyers/owners looking to buy a home or renew their mortgage in the near future, should look at holding a rate as early as possible. Most banks or lenders will guarantee a rate up to four months before possession/renewal. And should rates decrease during that time, you will still have access to those lower rates.

To find the best Edmonton mortgage rates available, it may be wise to enlist the help of a mortgage broker. A mortgage broker may be able to lock in a few different mortgage rates from various lenders. They can monitor changing rates over a few days so that you can take advantage of any fluctuations while also maximizing your rate hold period.

What length of fixed-rate mortgage term should I select?

In the context of similar mortgage rates for both variable and fixed, it makes sense to lock in with a fixed-rate mortgage right now. But for how long?

That’s a difficult question to answer with so much uncertainty around the future of interest rates at this point. Much of what happens with interest rates will depend on how quickly inflation responds and drops to reasonable levels once again.

Currently the Bank of Canada is predicting inflation will drop to a consistent 2% sometime in 2024. This is largely based on the assumption that current inflation is mainly due to persistent supply-chain constraints and not a larger underlying systemic issue.

Depending on your situation, it may make sense to have a fixed mortgage rate term that will provide consistency and peace of mind until at least sometime in 2024.

Have questions about Edmonton mortgage rates and the housing market? Call/text Wally at 780.238.7384. With nearly 20 years of experience, he has answers to even the toughest real estate questions.
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