Canadian housing affordability worsens in 11 of 13 major markets: new report
Mortgage professionals watching for a spring thaw in demand were instead met with another chill in February, as buying a home in most major Canadian cities required more income and higher monthly payments.
Ratehub.ca’s latest home affordability report found that 11 of 13 large urban markets saw conditions worsen between January and February 2026, even though mortgage rates were largely flat.
Affordability in the study was defined as the gross income a buyer would need to qualify for a mortgage on the average-priced home, using a 10% down payment, 25-year amortization and standard assumptions for taxes and heating.
Prices, not rates, drove February deterioration
“Home affordability worsened in the majority of the cities we looked at. Only two major cities saw improvements this month,” Penelope Graham, mortgage expert at Ratehub, said.
“This is the first time since June of last year where we’ve seen affordability worsen in most cities,” she said, pointing to modestly higher prices layered on top of already elevated stress test and contract rates.
The study used an average 5-year fixed rate of 4.41% and a stress test rate of 6.41% drawn from the Big Five banks.
“While mortgage rates remained flat month-over-month, home prices did not. The increases in the average home prices were enough to impact the income required to buy a home,” Graham said.
“Montreal saw the most significant increase with $2,800 in additional income required to purchase the average home. The city saw the biggest change in home price at $14,300 more month-over-month,” Graham said, adding that the modeled borrower would pay $76 more per month, or $912 per year, than if they had purchased in January.
“Halifax also saw a big change, closely following Montreal, with $2,650 in additional income required to purchase the average home,” she said, with payments up $71 per month, or $852 per year.
St. John’s went the other way. “St. John’s was the only city that saw reasonable improvement in home affordability, with $1,130 less income required to purchase the average home,” Graham said, citing a $6,300 drop in the benchmark price and savings of $30 per month in payments.
House prices need to fall to restore affordability
The Bank of Canada’s senior deputy governor previously signalled that lower home prices are a necessary part of fixing Canada’s affordability crunch, even as wars, tariffs and trade tensions kept jostling the broader inflation outlook.
Carolyn Rogers said the central bank is reassessing how much housing weakness it has built into its forecasts.
“We've all been worried about how fast house prices went up in recent years and now we're worried about how they're coming down. We do need them to settle down a bit for housing to get more affordable,” Rogers said.
Rate strategy back in focus for borrowers
The report underlines how small shifts in pricing and rate selection continue to reshape borrowing capacity.
“It’s important that borrowers take a look at current mortgage rates and what’s available to them; whether they’re in the market to purchase or have a renewal coming up,” Graham said.
“We use the average of the Big Five in our report, but securing a lower rate, such as the above, will have a big impact on how much borrowers can qualify for,” she said.
On an average national home price of $663,828, Graham noted that qualifying income at the 4.41% Big Five average came to $140,800. The best-available 3.99% fixed rate reduced the requirement to $136,050 - a difference of $4,750 in income and $141 a month in payments.
Source CMP
By Liezel Once
