October 6, 2025
With the Bank of Canada expected to gradually trim rates through 2025 and 2026, many Calgary homeowners are hopeful that lower interest rates will finally bring relief. But while headlines promise rate cuts, the actual savings for most borrowers are far smaller than expected. Even a full half-percent drop on a $450,000 mortgage may only reduce payments by around $130 per month—less than many anticipate. This is because the amortization length, remaining balance, and the type of term you choose all influence how much a small rate change really saves you. Understanding these mechanics helps separate financial fact from wishful thinking.
Mortgage math doesn’t move linearly. For example, a borrower renewing at 5.4% who waits six months for rates to fall to 4.9% might save roughly $1,500 per year. However, if inflation stays sticky or lenders tighten their discounts, that advantage can quickly vanish. Meanwhile, if the borrower delays refinancing, the cost of waiting—extra interest payments, new qualification hurdles, or higher closing costs—can outweigh the benefit of the slightly lower rate. Calgary homeowners with shorter amortizations or smaller remaining balances often see even smaller differences, because a lower portion of their payment goes toward interest.
Local factors matter too. In Calgary, where property values have leveled and household debt remains high, lenders are paying closer attention to income stability and equity ratios. This means a homeowner expecting easy approval once rates dip might still face tougher qualification standards under the federal stress test. Even if variable rates edge down, the qualifying rate is typically two percentage points higher than the contract rate—so “lower rates” don’t always translate to easier approvals or bigger savings. The good news is that Calgary’s overall market stability provides room for strategic refinancing or re-amortization if you plan ahead.
Instead of waiting for a rate drop that might not move the needle, focus on what you can control. Review your amortization schedule, reduce high-interest consumer debt, and speak to your mortgage broker about rate-hold strategies or early renewals. Even a modest prepayment or restructuring your loan to match your long-term goals can have more impact than chasing a small rate cut. The borrowers who win in 2026 won’t be the ones who waited for the perfect number—they’ll be the ones who prepared early, understood the math, and made their next move strategically.
Source: Absolute Mortgage Team