Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

Article content

Recent increases in borrowing costs have led to buyers across Canada requiring more income to qualify for a mortgage, except in Toronto and Hamilton, a new study has found.

The Ratehub.ca report examined average prices in August from July in most major cities with more than half seeing declines, led by Toronto and Hamilton.

Article content

In Toronto, for example, the average price declined nearly $20,000 to about $1.141 million in August.

Article content

That led to the annual income required to decline $1,950 to $233,300 to qualify for a 25-year amortized mortgage with the average fixed, five-year rate, based on the federal stress test guidelines.

The decrease in required income in Toronto occurred even though the offered mortgage rate increased 10 basis points to 6.22 per cent. Under the stress test, however, buyers must qualify at 200 basis points above that rate, which is 8.22 per cent, the study indicated.

In contrast, most other cities, Calgary included, saw affordability decline.

In fact, Calgary saw the third highest increase in affordability among major cities. There, the average price of a home in August increased $2,500 from July to about $553,800.

At the same time, the income required to qualify for a mortgage under the stress test increased $1,350 to $120,850 per year.

Still, the income requirement for a Calgary buyer ranks lowest among Canada’s large cities. By comparison, Vancouver saw the biggest decrease in affordability even though its average price in August fell $2,300 from July — the third largest decline in Canada — to about $1.208 million.

Article content

Yet the annual income required also increased due to rising borrowing costs. There, buyers required $246,100, or $1,480 more income than in July. Driving that increase was the rise in the average mortgage rate from 6.12 per cent in July to 6.22 per cent in August.

Vancouver saw the highest increase in income required in the study, as well as leading all cities for the most annual income to qualify for a mortgage.

No Facebook? No problem.

Meta has blocked news articles from appearing in Canada through its social media platforms Facebook and Instagram, so skip the gatekeeper and come straight to the source.

Share this article in your social network