Calgary Mortgage Renewals: The $700 Monthly Payment Shock Hits Home

CALGARY, AB — The mortgage renewal cliff has arrived. Thousands of Calgary homeowners who locked in sub-2% rates during the pandemic now face a brutal reality: interest costs that could triple, adding an average of $500 to $700 per month to a standard Calgary mortgage.

With the Bank of Canada holding the overnight rate steady at 2.25% as of late January 2026, the 'peace of mind' isn't trickling down to those staring at renewal letters. The average Calgary home price sits near $553,900, and the jump from a 1.49% pandemic rate to today's 3.69% renewal rate represents a 20-25% increase in monthly carrying costs.

The Rate Landscape: 3-Year vs. 5-Year

Fixed mortgage rates are driven by Government of Canada 5-year bond yields, currently hovering around 2.88%. The spread between terms is razor-thin:

• 3-Year Fixed: ~3.59%
• 5-Year Fixed: ~3.69%

That narrow 10-basis point spread suggests lenders are hedging against future volatility. The choice comes down to cash-flow management versus insurance.

The 3-Year Play: Betting on Future Cuts

The 3.59% three-year fixed is for borrowers who believe rates will fall by 2029. You get lower immediate costs and flexibility to renegotiate sooner. In Calgary's shifting market — where the Calgary Real Estate Board notes a move toward more balanced conditions — a shorter term allows easier refinancing if you upgrade or sell.

The 5-Year Lock: Budget Certainty

The 3.69% five-year fixed buys peace of mind. Scotiabank and National Bank forecasts suggest rates could rise by 50 basis points later in 2026 due to persistent inflation. For families already squeezed by rising property taxes and utility costs, absolute budget certainty wins.

The Reality Check on 'Cheap Rates'

Many Calgarians remain anchored to pandemic rates, waiting for a return to 2%. Historical context matters: rates under 2% only occurred between late 2020 and early 2022 — an emergency setting during a global crisis. In 1990, a 5-year fixed was 13.25%. In August 1981, rates hit 21.75%. The 2000s saw rates between 5% and 7%.

Today's 3.69% is historically strong. Central banks prefer to keep the overnight rate around 2% to 2.5% — where it sits now — to maintain economic ammunition for real emergencies.

The Stress Test Trap

Renewing with your current lender typically avoids re-qualification. But chasing that 3.59% at a new institution means proving you can handle the Mortgage Stress Test qualifying rate of 5.59% under OSFI B-20 guidelines.

The cliff is steep, but it's not a freefall. The 1.4% rates of 2021 were the exception, not the rule. The cost of waiting for 'pandemic rates' that may never return could exceed the savings, especially if Calgary home prices continue climbing 3-4% annually.