Higher rates more than offset home price drop to worsen affordability: report
TORONTO — A new report says that while home prices are down compared with last year, higher mortgage rates mean affordability hasn’t improved for Canadians.
The report by Ratehub.ca says in nine of the 10 major cities it reviewed, Canadians need a higher annual income compared with January 2022 to qualify for a mortgage for an average priced home.
Victoria saw the largest increase in annual income required at $169,250, up from $143,750 a year earlier.
That’s even as the average home price in the B.C. capital fell to $866,700 compared with $878,500 a year ago.
Hamilton was the only city looked at in the report to see affordability improve year-over-year with $4,350 less in annual income required due to a $202,900 drop in average the home price in the city.
Ratebhub.ca based its report on a mortgage with a 20 per cent down payment, 25-year amortization, $4,000 annual property taxes and a $150 monthly heating bill. It used a mortgage stress test rate of 7.37 per cent for 2023, up from 5.25 per cent in January 2022.
This report by The Canadian Press was first published Feb. 16, 2023.