Welcome to your comprehensive guide to navigating Alberta's evolving economy and housing market. In this report, updated April 23, 2025, we'll dive into the factors shaping homeownership in our province—like the Bank of Canada’s rate adjustments—and how they impact your home ownership journey.

Whether you’re looking to buy or already own, we’ve gathered insights from our economics and mortgage teams, each offering their deep expertise with a uniquely Albertan lens. By distilling complex economic data into practical insights, we aim to empower you with the knowledge needed to confidently navigate affordability, mortgage options and the changing landscape of Alberta real estate.

This report will be updated regularly following each Bank of Canada rate announcement, so you have the most current information.

The Bank of Canada announced on April 16 that it is holding its policy interest rate at 2.75%. After seven rate cuts in a row, this is the first pause since April 2024 when the Bank held the policy rate at 5%. This quote pulled directly from the Bank’s statement sums up the general feeling right now, “Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally.“

Sourced from The Twenty-Four.

Thanks to continued uncertainty, the Bank of Canada is trying to strike a balance between managing inflation and keeping our economy moving forward.

We're still seeing a lot of new home construction, which is great. It means more people are moving here, and we need places for them to live. But that increased demand is also pushing up resale home prices, especially in Calgary and Edmonton. We're still more affordable than most other big cities, but average prices are definitely on the rise.

Looking ahead, we're expecting interest rates to keep trending down, but maybe not as quickly as we thought. So, if you're thinking about buying, consider how much you’d have to pay for a variable rate mortgage both now and if rates rise, and talk to an expert to determine the best time to buy for you. Homeowners, keep an eye on your equity and explore whether refinancing makes sense.

Even with economic uncertainties, including the potential ripple effects of tariffs, Alberta's housing market is looking pretty solid for the next couple of years. There are definite challenges, but there are also some real opportunities for both buyers and owners.

“How does the Bank of Canada’s rate affect my mortgage rate?”

The Bank of Canada's interest rate plays a role in setting mortgage rates, but it’s not a direct correlation. They set an overnight rate that influences how much banks borrow money for, which then impacts the "prime rate" used for variable mortgages. However, banks also consider their own expenses, what other banks are doing and your individual financial picture (like your credit score and down payment). Fixed-rate mortgages are even less directly tied to the Bank of Canada, as they're more connected to bond yields. So, the Bank of Canada’s rate is important, but many factors determine your actual mortgage rate.

For current homeowners in Alberta, the recent economic developments present both opportunities and things to keep an eye on. If you have a variable-rate mortgage, you've likely already seen the benefit of the Bank of Canada's rate cuts earlier this year, with either lower monthly payments or more of your payment going towards the principal.

To illustrate the impact of rate changes, here’s an example: say you initially have a 5-year variable closed mortgage at 4.75%, then the rate for your same mortgage drops to 4.25%. If you keep your payment the same, it would decrease your amortization period—how long it takes to pay off your mortgage—by two years and one month. This demonstrates how lower rates can accelerate your payoff and reduce the total interest you’d have to pay.

And with the possibility of further rate cuts coming, those savings could increase. If you have a fixed-rate mortgage, your rate hasn't changed—but it's worth noting that the drop in government bond yields could mean lower rates for you if your mortgage is coming up for renewal soon.

One of the big positives for Alberta homeowners is the strength of the housing market. With rising resale prices, particularly in cities like Calgary and Edmonton, your home equity—the difference between your home's value and what you still owe—is likely growing.

With the potential for further rate cuts on the horizon, now might be a good time to explore refinancing your mortgage. Refinancing essentially means replacing your current mortgage with a new one. It’s a strategy that comes with pros and cons, depending on your situation.

Potential benefits of refinancing

• Lower interest rates. If rates have declined since you got your original mortgage, refinancing can secure you a lower rate.
• Reduced monthly payments. A lower rate can translate into lower monthly payments, freeing up cash for other needs.
• Debt consolidation. Refinancing can allow you to combine other debts (like credit card debt) into your mortgage, potentially simplifying your finances and lowering your overall interest costs.
• Access to home equity. You can refinance to "cash out" some of your home equity, which can be useful for home renovations, investments or other significant expenses.

Potential drawbacks of refinancing

• Closing costs. Refinancing involves expenses like appraisal fees, legal fees and other closing costs, which can add up.
• Prepayment penalties. You might face penalties for paying off your existing mortgage early to refinance, depending on your mortgage terms.
• Extended loan term. Refinancing to lower your monthly payments could mean extending your loan term, which ultimately means paying more interest over the long run.
• Credit score impact. Refinancing requires a hard credit check, which can slightly and temporarily lower your credit score.
• Resetting amortization schedule. Refinancing resets how long it takes to pay off your mortgage, meaning more of your early payments will go towards interest rather than paying down the principal (the initial loan amount).

With house pricing in Alberta rising, many people may be rethinking how they live in their current homes. Some are delaying their dreams to move to a larger space due to affordability concerns, instead choosing to improve their existing properties. And with strong population growth in Alberta, many homeowners are also taking advantage of refinancing to create secondary suites in their homes. This can generate rental income to help offset costs, while potentially adding value to the property. Secondary suites can also be a great option for multi-generational families, providing accommodation for aging parents or young adult children.

If your mortgage is up for renewal, our experts caution that, while we have seen interest rates come down from their peak, many Canadian homeowners renewing in 2025 are expected to face higher interest rates and increased monthly payments—especially those who took out mortgages at historically low rates during the pandemic. Canada Mortgage and Housing Corporation (CMHC) estimates that homeowners renewing in 2025 could face monthly payment increases of 30 to 40%. Online mortgage calculators, like our mortgage payment calculator, can help you get a sense of how your payments might change, but it's always best to seek personalized advice from a mortgage specialist as early as possible. They’ll help you find the right solution for right now.

While getting the best rate is important, it’s not the only factor. Here are other aspects to think about:

• Does the term or repayment align with your goals, including any plans to sell?
• Does the mortgage offer flexibility in case of unexpected life events, including the ability to skip or defer payments?
• What are the costs, penalties or restrictions on making future changes to your mortgage?
• Does the mortgage allow for flexibility in making lump-sum payments or increasing regular payments to pay it off faster?
• Do you have mortgage credit protection insurance? If you switch lenders, your existing coverage will be canceled and you'll need to reapply. This could affect your premiums and eligibility, especially if your health has changed.

When the cost to borrow on a mortgage decreases, you have two main options: you can lower your mortgage payments to increase your cash flow, or pay off your mortgage faster by maintaining the same payment—more of your payment will go toward the principal amount on your loan, building more equity.

When it comes to deciding whether to save or pay down your mortgage, our experts often suggest a combination of both. Contributing to Registered Retirement Savings Plans (RRSPs) can provide tax benefits, while using tax refunds to make lump-sum payments on your mortgage can accelerate your payoff.^*

However you’re hoping to navigate the current housing market, remember that the best way to navigate any change is to make the best decision for your life. Rates will continue to fluctuate, as will our economy, so meeting with an expert to get a full picture of what’s best for you now and in the future will equip you to make informed decisions.

So, where does this leave us? The Bank of Canada's recent moves—including trimming the rate again on March 12 to 2.75%—coupled with the influx of people moving to Alberta, are really shaping our housing market. We're seeing some potential good news with interest rates, but resale prices are steadily climbing, and there's still plenty of economic uncertainty.

A big factor here is the economy, and the Bank of Canada is trying to navigate some tricky situations, especially with tariffs. These tariffs could put upward pressure on prices and slow things down, so the Bank is cutting rates partly to try and offset that.

That means planning ahead is more important than ever.

If you're looking to buy, it’s all about being strategic and grounding in your personal situation. Explore how much you’d have to pay if the variable mortgage rates go up, and talk with an expert to figure out the next right move for you. And if you already own a home, now's the time to think about how you can maximize your investment. Your home equity is likely growing, so explore whether refinancing makes sense.

We all know there are things we can't predict, especially with how the tariff situation plays out. Alberta's economy is still looking pretty good, thanks to our relative affordability and growing population, but it's important to be prepared. Equipped with the right advice, you can make the most of what Alberta's housing market has to offer.