Homes became less affordable across Canada in May, driven by rising prices and higher mortgage interest rates, according to a new report from Ratehub.ca. The monthly affordability report, released in June, showed that the income required to qualify for a five-year, fixed-rate mortgage for the average-priced home increased in every major market monitored.
Calgary Sees Modest Increases
In Calgary, the average home price reached $573,000 in May, up $2,400 from April. The mortgage interest rate also edged higher, rising from 4.47% to 4.49%. Under the federal stress test rule, which requires borrowers to qualify at 200 basis points above the offered rate, prospective buyers in May needed to qualify at 6.49%.
As a result, a Calgary buyer would need an annual income of $124,360 to qualify for a mortgage, approximately $660 more than in April. The monthly mortgage payment increased by $18 to $2,940. Calgary ranked in the middle of the pack for affordability among the 13 markets studied.
National Trends
St. John's, Newfoundland and Labrador, experienced the largest month-over-month increase in the income required to qualify for a mortgage. The average home price there rose by $13,900 to $414,200, pushing the required annual income to $94,020, up $2,800 from April. Monthly mortgage payments climbed by $75 to $2,125. Despite this jump, St. John's remains one of the most affordable markets in the nation.
In Toronto, the average home price increased by $2,400 to $946,500 in May. Buyers needed an annual income of $195,720, up $780 from April, with monthly mortgage costs of $4,856, an increase of $22.
Montreal Bucks the Price Trend
Montreal was the only market to see a decrease in home prices, falling $1,000 from April to $593,400. However, the rise in interest rates still pushed the required annual income up by $10 to $128,260, and monthly mortgage costs increased by $1 to $3,044.
The report underscores the ongoing challenges faced by Canadian homebuyers as both prices and borrowing costs continue to climb, eroding affordability across the country.
