What Calgary Homeowners Need to Know as Rates Settle Into a New Normal
After years of dramatic interest rate swings, Canada’s mortgage landscape is entering a new phase. The chaos of rapid hikes is behind us, inflation is largely under control, and interest rates are no longer the headline shock they once were.
As we move into 2026, Calgary buyers and homeowners approaching renewal are facing a different — and arguably more nuanced — question:
Do you lock in certainty, or stay flexible in a more balanced rate environment?
With economists forecasting a slower, steadier pace for rate changes and Calgary’s housing market trending toward healthier equilibrium, the fixed vs. variable debate is less about timing the market and more about aligning your mortgage with your lifestyle, cash flow, and long-term plans.
There’s no universal “best” option — but there is a best option for you.
Rates in 2026: Stability Is the Story
Following several measured rate cuts, the Bank of Canada’s overnight rate sits at 2.50%, its lowest level since 2022. While further cuts remain possible, most forecasts suggest the central bank will move cautiously through 2026, prioritizing economic stability over aggressive stimulus.
In Calgary, this has created an unusually tight spread between mortgage products:
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5-year fixed rates: approximately 4.1% – 4.4%
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5-year variable rates: approximately 4.0% – 4.2%, depending on lender and borrower profile
This near-parity is notable. Historically, variable rates offered a clear discount, compensating borrowers for accepting uncertainty. In 2026, that discount has largely disappeared — and that changes the decision-making process entirely.
Why Fixed and Variable Rates Are So Close
The narrowing gap comes down to confidence and caution.
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Central bank stability: With the Bank of Canada signalling gradualism rather than urgency, lenders no longer need to price in large risk buffers.
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Bond market influence: Fixed mortgage rates track government bond yields, which have softened amid slower economic growth and easing inflation.
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Prime rate restraint: Variable rates remain steady as policymakers avoid deep cuts that could re-ignite inflation.
The result? Fixed and variable mortgages meeting in the middle — a sign that we’ve moved out of crisis mode and into a more predictable cycle.
Fixed-Rate Mortgages: Predictability in an Uncertain World
For many homeowners, fixed rates aren’t about chasing the lowest possible number; they’re about control.
A fixed-rate mortgage offers consistent payments for the entire term, making budgeting simpler and shielding you from unexpected rate increases. After the volatility of 2022–2023, that peace of mind carries real value.
Fixed rates tend to suit:
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Households with tighter monthly cash flow
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Buyers planning to stay put long term
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Those who value certainty over marginal savings
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Families who want to remove interest rate risk from the equation entirely
Even if rates drift slightly lower, many homeowners are comfortable paying a small premium for stability — especially after seeing how quickly conditions can change.
Pros of Fixed Rates
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Predictable monthly payments
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Protection from future rate increases
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Easier long-term planning
Cons of Fixed Rates
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Typically slightly higher than variable rates
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Higher penalties if you break the mortgage early
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No benefit if rates fall during your term
Could Fixed Rates Fall Further in 2026?
It’s possible, but not guaranteed.
If economic growth slows more than expected or global uncertainty pushes investors toward bonds, yields could fall further, allowing fixed rates to dip. However, most forecasts suggest any reductions would be modest.
The larger takeaway: the dramatic fixed-rate drops of the past are unlikely to repeat, and the spread between fixed and variable is expected to remain narrow through 2026.
Variable-Rate Mortgages: Flexibility Still Has Value
Variable-rate mortgages move with the Bank of Canada’s policy rate, offering borrowers the potential to benefit if rates decline further, but with greater exposure to change.
There are two main structures:
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Adjustable-rate mortgages (ARM): Payments rise or fall as rates change.
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Fixed-payment variable mortgages: Payments stay the same, but the portion going to interest vs. principal shifts. Rate increases can slow equity growth or trigger payment adjustments if thresholds are reached.
Beyond rates themselves, variable mortgages offer structural advantages that matter just as much as pricing.
Why borrowers still choose variable:
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Significantly lower penalties if you sell or refinance
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Easier early payouts or restructuring
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Ability to convert to a fixed rate mid-term if conditions shift
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Often better suited for short- to mid-term ownership
Pros of Variable Rates
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Potential savings if rates decline
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Lower break penalties
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Greater flexibility for life changes
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Opportunity to lock into a fixed rate later
Cons of Variable Rates
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Payments or amortization can change
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Less predictable cash flow
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Requires comfort with some level of uncertainty
What History Tells Us — And What It Doesn’t
Historically, variable-rate borrowers have come out ahead most of the time. From the 1950s through the early 2000s, Canadians with variable mortgages won roughly 90% of the time.
More recently:
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After the 2008 financial crisis, variable borrowers benefited from years of ultra-low rates.
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During the pandemic, some variable rates dropped below 1%, while fixed rates remained higher due to bond market uncertainty.
But history also delivers a warning.
The rapid rate hikes of 2022–2023 erased years of savings almost overnight for many variable borrowers. Payments jumped, trigger points were hit, and flexibility suddenly came at a cost.
The lesson for 2026 isn’t that variable is “better,” it’s that risk tolerance matters more now than ever before.
The Bottom Line for Calgary Homeowners in 2026
As Calgary’s market stabilizes and interest rates settle into a more predictable range, the fixed vs. variable decision has shifted.
It’s no longer about guessing where rates will go next.
It’s about choosing the structure that best supports your financial reality.
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Fixed rates reward those who value certainty and stability.
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Variable rates continue to favour flexibility and long-term planning — but only if you can absorb short-term fluctuations.
The smartest mortgage isn’t the lowest rate on paper — it’s the one that fits your goals, timeline, and comfort level.
Thinking About Your Next Move?
I believe strong real estate decisions come from strategy, not guesswork.
Whether you’re buying, renewing, or planning ahead, I can help you:
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Evaluate your options
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Connect with trusted mortgage professionals
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Build a plan that aligns with your home, your finances, and your peace of mind
Let’s make sure your mortgage works for you, not the other way around.