It took a little bit more income and slightly higher monthly payments to buy a home in May compared to April in eight of 13 cities measured by Ratehub.ca’s affordability report released on Thursday. Four of the 13 saw costs drop, while in Calgary, costs remained flat. For the report, Penelope Graham of Ratehub.ca said they considered the income required to qualify for mortgages, based on the average home price in each city, taking into account stress test rules and a 10% downpayment, with a 25-year amortization. The mortgage rate used came from the average mortgage rates from Canada’s five big banks. Graham said using the current best rate available, 3.84%, would impact qualification amounts. “Mortgage rates remained unchanged again (in May), which means affordability changes were due to home price increases and decreases in each city.” “While the majority of the cities saw affordability worsen, the biggest change was actually in Hamilton, Ontario, where affordability saw a massive improvement with $3,480 (from an annual income of $166,500 to $163,020 to qualify) less income required to purchase the average home. This is due to home prices dropping $18,300, the biggest change of all the cities,” said Graham April's average price in Hamilton was $801,400, falling to $783,199 in May. .At the other end of the scale was the capital of Newfoundland Labrador, said Graham. “St. John’s saw the most significant increase with $1,690 in additional income (from an annual income of $84,760 to $86,450) required to purchase the average home, due to home prices rising $8,900, from $369,400 to $378,300, the biggest increase of all the cities,” she said. “Since mortgage rates remained flat, monthly mortgage payments were impacted by home prices only,” she added. "The Hamilton borrower in this scenario would save $93 dollars on their monthly mortgage payment, $1,116 per a year in May compared to if they bought in April. The St. John's borrower in this scenario would pay an additional $45 dollars on their monthly mortgage payment, $540 per a year.” In Calgary, the average home price, $583,00 remained the same in May as in April, with a monthly payment of $2,958 and an income of $125,170 to qualify. Graham said housing markets are shifting. “While buyers have enjoyed attractive housing affordability conditions throughout the spring, those days may be numbered,” she said. “The latest May national housing data reveals sales are firming up over the short term. Meanwhile, growing geopolitical and fiscal debt concerns have pushed bond yields higher, putting upward pressure on fixed mortgage rates.” The next Bank of Canada rate announcement is July 30.
