Edmonton Mortgage Rates

Finding the lowest mortgage rate in Edmonton will have the ability to save you thousands of dollars in interest, while also helping you pay off your mortgage quicker. This makes shopping around to find the best rate crucial. There are 3 main ways to shop around for a better mortgage rate:

1. Shop around and compare mortgage offerings with multiple lenders

With this option, you will be researching lenders and mortgage rates in Edmonton on your own, meaning it will require a time commitment. Once you have identified the lenders you want to discuss further with, scheduling an in-person meeting is the next step. In this meeting, you will be able to negotiate for a better rate, while also learning more about the mortgage terms and conditions the lender offers, and how large of a mortgage you will qualify for. After meeting with multiple lenders and negotiating to get the best rate with each lender, you can choose the lender with the best mortgage rate out of all your options.

2. Meet with a mortgage broker to have them compare offerings for you

This option will save you time, while allowing you to have a mortgage professional negotiate with lenders on your behalf. Your broker will present you with your mortgage loan options, and you will be able to choose which one is best for you. The cost for an Edmonton mortgage broker will not be paid directly by you, however the broker will be paid a finders fee by the lender you choose to get a mortgage from.

3. A combination of both options, shopping around between mortgage lenders and a mortgage broker

Although this option will be the most time consuming of the three, it will give you the reassurance that you have exhausted all options in finding the best mortgage rate. This option will also allow you to determine if you have been successful in negotiating down to the lowest possible rate, considering that you will be able to see what rates your mortgage broker is able to negotiate down to.

With there being over 170 Edmonton mortgage brokers with offices in the city or who can work with you online, you will have many options to find the best mortgage broker rates Edmonton has. Mortgage brokers in Edmonton are even able to get you mortgages from lenders who do not deal directly with the public, meaning they can help you explore more lender options. Some of the largest mortgage brokers operating in Edmonton are:

The reason that a 5 year fixed mortgage is popular in Edmonton is because people value the stability and peace of mind of not looking for a new mortgage rate constantly. As well, a 5 year fixed mortgage gives you the stability of knowing that even if interest rates go up, you will be able to have the same mortgage rate for the full 5 years. Even after your 5 year term is done, you will have had the ability to pay off your mortgage for 5 years with no changes in your interest rate, which will give you added breathing room even if your mortgage rate goes up after the 5 year term is done.

As both 5 year government bond yields have fallen, and as more competition occurs between lenders, the difference between a short term Edmonton mortgage rate and a 5 year fixed rate mortgage in Edmonton has compressed. This means that for the added stability a 5 year mortgage offers, the interest rate will be fairly similar to shorter term mortgage options.

Although variable rate mortgages have turned out to be the better option over the last few decades, with the overnight interest rate falling, a fixed mortgage in Edmonton looks to be the better option currently. The reason for this is because the prime rate that mortgage lenders offer and current Edmonton mortgage rates are at the lowest levels they have ever seen, meaning it is a good opportunity to lock in your interest rate over your full mortgage term. As well, Canada’s economy is recovering from the pandemic and inflation in everyday goods is starting to show, meaning it's likely that interest rates will rise in 2022.

Although affordable home prices in Edmonton mean that interest rates rising will not drastically affect your mortgage affordability, it will mean larger interest payments and it will hinder the speed you can pay off your mortgage at.

Even with bad credit, you are able to get a mortgage in Edmonton. Both traditional lenders such as banks, and mortgage insurance companies such as the CMHC will require a credit score of at least 600. There are other lenders who will be willing to provide a loan however, including private mortgage lenders and B-lenders. Most B-lenders will require a credit score of at least 550, meaning they won't be an option if your credit score is much worse. This means that a private mortgage lender who offers bad credit mortgages may be your only option. Private mortgage lenders will mean short term funding at a high interest rate, meaning your credit score will need to improve over the time you have the mortgage in order to switch to a traditional mortgage lender. Since private mortgage lenders especially look at how re-sellable the property could be, getting a private mortgage in a big city like Edmonton will mean you have plenty of private lender options.

If you have gone bankrupt in the past and that's why your credit score is so low, in Alberta this event will be off your credit score report in as little as 6 years. No matter when you are planning on buying a home in Edmonton, paying bills on time and in full, and being aware of your credit score is crucial to avoid needing to get a bad credit mortgage.

With the average home price in Calgary being $494,111, while the average home price in Edmonton is $398,229, you can expect the average mortgage amount to also be higher in Calgary. Assuming a 20% down payment, the average mortgage amount in Edmonton would be $318,580, while the average mortgage amount in Calgary would be $395,290. With Edmonton having a lower average mortgage amount, it will mean home buyers in Edmonton will have less bargaining power when negotiating for a better mortgage rate. However, Edmonton’s lower average mortgage amount will mean that becoming mortgage free is easier than in Calgary, with a smaller mortgage balance to pay off, and less interest accumulating each month.

Rental properties are a good way to build up equity and have your money work for you, and Edmonton’s affordable housing market makes purchasing a rental property more attainable. Edmonton continues to see population growth coming both internationally, and from other parts of Canada, as people are seeking the lower costs of living and high salaries Edmonton can offer. This bodes well for rental demand going into the future, meaning that there will be more people living in the city who can rent out your rental property.

The biggest drawback of purchasing a rental property in Edmonton is the high level of vacancies in the city. Edmonton has shown the ability to keep up with the demand to live in the city, as new home construction adds more units on the rental market, which has led to elevated vacancy rates. As well, with a portion of Edmonton’s economy being reliant on the price of oil, times where oil is weak will mean less demand to live in the city and higher unemployment rates.

Overall, Edmonton rental properties can be a good investment if you are getting a good price for the property. Getting a good price may include getting a property at a high cap rate, which is the amount of money the property earns compared to the purchase price. This may mean a cap rate between 6% and 8%, depending on the rental property and your risk tolerance. If you are unable to purchase a property at a cap rate that makes up for the risk of higher vacancies in the city, it may not be worth the investment to own a rental property in Edmonton.

Since mortgage protection insurance is an add-on coverage, it won't be a requirement when you get a mortgage in Edmonton. However, mortgage protection insurance can cover all or part of your remaining mortgage amount if something is to happen to the mortgage holders. This can be especially important if you have a large mortgage amount and are worried about your family not being able to stay in the home if something goes wrong. Especially in Edmonton, with the oil price being a key driver for the overall economy, getting job loss coverage may be an option to consider if you are working in the oil and gas industry or a related industry, however not all lenders will offer this coverage.

Buying your first home can be difficult, as you are new to the process, and don't have the existing equity built up from owning a home. To help, Edmonton home buyers have multiple programs they may qualify for:

This program offers land cost deferrals on your mortgage for townhomes that are built upon surplus school land. The land cost deferral will last 5 years, helping to make purchasing a home more affordable. Requirements for the program include: an income below $117,000, a down payment of at least 5%, and a personal net worth below $25,000.

The PEAK program provides up to 5% of the purchase price in the form of a second mortgage to homebuyers, to help them cover their down payment. This second mortgage will have no interest for 5 years. In order to qualify, you will need an income below $90,000 if you have children, or below $80,000 if you do not.

Home Buyers Plan: This program lets you withdraw up to $60,000 tax-free from your RRSP accounts, in order to use it for a down payment. For the average Edmonton home price, if you were withdrawing close to the maximum amount from your RRSP for a down payment, this amount would be sufficient enough to cover the minimum down payment requirements.

Government of Canada Shared Equity Program: Under this program, the federal government will provide you with some equity to help with a down payment, while also sharing in the ownership of your home. The government’s share will be paid back when you sell the property or within 25 years.

Edmonton has seen a sharp rise in the vacancy rate of rental properties in the city, rising from 4.9% in 2019 to 7.2% in 2020. This was caused by 3 main factors:

• 1. Lower employment in the city during the pandemic, with employment rates falling 6.4%
• 2. Lower interest rates that helped push Millennials to purchase homes rather than rent, and
• 3. Lower migration rates with more uncertainty from the pandemic

As the economy re-opens and many of these factors that have led to a rise in the vacancy rate reverse, it may lead to higher rental prices and a harder time finding a place to rent. This is something home buyers may need to consider when deciding whether to purchase a home now or to wait.

Edmonton continues to build more houses for both home buyers to purchase, and to add to the rental market. Year-to-date new home construction in Edmonton is higher than during the same time period in 2020, with over 5800 housing starts so far in 2021, versus just over 5000 in 2020. As well, almost 5600 units have been completed year-to-date, versus just over 4800 in the same time period in 2020. The reason for the ramp-up in housing starts and completions is a combination of both a rise in house prices and housing demand across Edmonton. As Edmonton has seen its residential inventory levels fall to some of its lowest levels over the past decade with record levels of housing transactions, continuing to build new homes is increasingly important. Part of the reason why Edmonton home prices haven't jumped as much as prices across other major cities such as Toronto and Ottawa is because of the ability to bring more inventory on the market rather quickly. Although 2021 is expected to close strong in regards to new home construction, 2022 and 2023 may see more moderate numbers of housing starts, with the potential for higher mortgage rates and lower demand.

According to the CMHC Housing Market Outlook in the spring of 2021, Edmonton is expected to see a strong economic recovery, with the oil price rebounding, vaccine rollouts continuing, and with international migration to the city starting to pick up into the near future. All three of these factors will be positive for Edmonton’s housing market, with a higher oil price leading to job growth in the region and added consumer confidence, and with international migration meaning more housing demand in the city. International migration will especially lead to more demand for rental housing, as international migrants usually choose to rent. Overall, the CMHC forecasts that home prices will remain relatively stable in Edmonton, while the number of home sales will be between 18,000 and 22,000 into 2022 and 2023.

Edmonton is a fairly affordable city, with affordable home prices and rents, no provincial sales tax, and cheap gas. For a family of 3, the cost of rent on a 2 bedroom apartment, food, transportation, and preschool is $3,989. This makes the cost of living in Edmonton among the cheapest of all major cities in Canada:

The combination of low basic living expenses and low housing prices make purchasing a home easier than locations such as Vancouver, with high living expenses and high housing prices. With the average household after-tax income in Edmonton being ~$7,200 per month and with $3,989 going to basic expenses, it would take ~2 years to save for a down payment on the average home price in the city of $401,390. This is a stark contrast to Vancouver, where it would take almost 12 years to save for a 20% down payment on the average home price of $1,172,800 using Vancouver’s average monthly after-tax income of $6,733.

Edmonton is the capital city of Alberta and the province's second largest city behind Calgary, as well as the 5th largest city in Canada. Edmonton has an economy that is very dependent on the oil & gas industry, however, it has continued to attract other sectors to the city, including companies in the financial sector. Large companies in the city include: Canadian Western Bank, Stantec, Intuit Canada, The Brick, AutoCanada, and ATB Financial. As the city and these employers continue to grow, it will make the economy less dependent on the oil & gas sector and will bring more stability to the local economy, increasing the demand to purchase homes.

The city of Edmonton’s property tax rate in 2020 was 0.93257%. This was a rise from 0.9081% in 2019, however, homeowners in 2021 will not have an increase in their property tax bill, with Edmonton’s council stopping tax increases for 2021.

The amount of property tax you pay will directly impact how large of a monthly mortgage payment you can afford. The higher your property taxes and other home-related expenses become, the less of a mortgage you will be able to afford in your monthly budget. Depending on your lender, property taxes may even be owed monthly to that lender, who then gives that property tax payment to the city.