The latest monthly affordability report from Ratehub.ca has revealed that it has become easier to qualify for a mortgage for the average-priced home in every market studied across Canada. This marks the first time since January that borrowing conditions have improved nationwide. The report calculates the minimum annual income required to buy an average-priced home in major Canadian cities based on month-over-month real estate data, including average home prices and mortgage rates.
The recent rate cuts from the Bank of Canada have played a significant role in making it easier for Canadians to qualify for a mortgage. The two quarter-point decreases in June and July have lowered Canada’s benchmark cost of borrowing from 5% to 4.5%. Additionally, the prime rate in Canada has decreased to 6.7%, leading to lower variable mortgage rates. Fixed mortgage rates have also dropped, with the average five-year fixed rate falling to 5.29%.
In terms of housing affordability across Canada’s major cities, the report shows how the income required to qualify for a mortgage has changed between June and July. The stress test rates used are 7.47% for June and 7.29% for July, with mortgage rates at 5.47% in June and 5.29% in July. The data reveals that in cities like Toronto, Vancouver, and Hamilton, the average home prices have decreased, resulting in a lower income requirement for potential home buyers.
In Toronto, real estate price growth has stalled, leading to a decrease in the average home price by $13,300 between June and July. This has made it easier for prospective buyers in Toronto, as they now require $5,410 less in income to purchase a home in July compared to June. Similarly, in Vancouver, the market has rebalanced with an increase in new listings and a decrease in home sales, resulting in a $9,400 decrease in the average home price and a $5,020 decrease in the required income for home buyers.
On the other hand, some cities like Regina and St. John’s saw a slight increase in average home prices, leading to a small increase in the income required for potential home buyers. However, overall, decreased mortgage rates have made it easier to purchase a home in each of the 13 markets studied in the report.
In conclusion, the latest affordability report from Ratehub.ca highlights the evolving borrowing conditions in Canada’s real estate market. With lower mortgage rates and decreasing average home prices in some cities, it has become easier for Canadians to qualify for a mortgage and purchase a home. This trend is expected to continue as interest rates are projected to fall further in the coming months, providing more opportunities for prospective home buyers across the country.