After years of rising home prices, home buyers in most major Canadian markets enjoyed falling prices in August from July, including the two priciest markets, according to Ratehub.ca’s latest affordability report, which measures 13 markets in the country. “According to Ratehub data, home affordability has improved in 10 of 13 cities this month,” says Jamie David, vice-president of Mortgages at Ratehub.ca. “Toronto, Vancouver, and Montreal saw the largest improvements while Halifax, Ottawa, and Fredericton were the three outliers that saw affordability worsen.” David said all the changes in August were solely due to home prices declining as the average of the Big Five Banks’ five-year fixed rates remained the same and had no impact on affordability this month. “Toronto saw the biggest decrease with $1,510 less income required to purchase the average home,” said David. “This was due to the home price decrease of $8,700, the biggest change out of all the cities. The Toronto home buyer in this scenario would pay $40 dollars less on their monthly mortgage payment, or $480 per a year, in August compared to if they bought in July.” “Vancouver and Montreal followed Toronto with $1,130 and $1,110 less income required,” David added. “These, the three largest markets in Canada saw the biggest improvements.” .Rounding out the five largest markets are Edmonton and Calgary with less income required of $470 and $170, respectively. On the downside were Ottawa, Fredericton, and Halifax. “Ottawa and Fredericton continued to see home affordability worsen month-over-month with $830 and $650 in additional income required to purchase the average home,” said David. “However, Halifax saw the biggest increase with $1,360 in additional income required.” Halifax had the biggest home price increase at $6,500. “The Halifax home buyer in this scenario would pay $36 dollars more on their monthly mortgage payment, or $432 per year, in August compared to if they bought in July,” said David. “While there was no change to the average of the Big Five Banks’ five-year fixed rates in August, the lowest five-year fixed rate available on the market has now moved higher,” said David. “The best five-year fixed rate is now 4.24%, up 15 basis points from last month. The sub-4% fixed rates that were still available at the time of our previous report have also disappeared." .Fixed mortgage rates are on a climb, said David. “The five-year Government of Canada bond yield has risen roughly 23 basis points since Sept. 2, as higher oil prices and renewed inflation concerns have pushed yields higher,” she said. “Lenders have already responded by raising fixed mortgage rates this week. Fixed mortgage rates could face another round of increases in the days and weeks ahead.” “For borrowers looking for a rate below 4%, variable mortgages are now the only option, with the lowest five-year variable rate currently at 3.40%.” David said the rate increases highlight the importance of securing a rate hold amid the current market volatility. "Securing a rate hold can provide valuable protection against further rate increases," she said. "For Canadians shopping for a home or approaching a mortgage renewal, a rate hold will lock in today’s rates for up to 120 days, protecting them against rate hikes.”
