Buying a home became a little tougher for many Canadians in June, as higher mortgage rates reduced affordability even in markets where home prices declined. According to Ratehub.ca's latest Home Affordability Report, affordability worsened in 11 of the 13 Canadian cities analyzed, with borrowers needing higher incomes to qualify for a mortgage.

The study, which is conducted monthly, gauges how affordability conditions are evolving in real time across 13 of Canada’s largest markets. It defines affordability based on the amount of income a borrower would need to earn to qualify for a mortgage on the average-priced home in their local market, based on national real estate data, changes to mortgage rates, as well as the mortgage stress test.

Higher mortgage rates outweighed softer home prices in June

Following several months of relatively stable borrowing costs, fixed mortgage rates rose in June as escalating tensions and renewed conflict between the United States and Iran pushed Government of Canada bond yields higher. The average five-year fixed mortgage rate among Canada's Big Five banks rose from 4.49% in May to 4.57% in June, pushing the mortgage stress test rate from 6.49% to 6.57%.

At the same time, home prices painted a mixed picture across Canada's housing markets. While prices increased in a handful of cities, including Calgary, St. John's and Montréal, many others — including Toronto, Vancouver, Ottawa and Halifax — recorded modest declines.

Normally, lower home prices help improve affordability by reducing the size of the mortgage buyers need to qualify for. However, in June, the increase in borrowing costs had a greater impact than falling home prices in most markets. As a result, 11 of the 13 cities analyzed saw the income required to purchase the average home increase, despite softer housing prices in many parts of the country.

June 2026: How much do you need to earn to buy a home in Canada?

This report is for illustration purposes only. Data is based on a mortgage with a 10% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating. Mortgage rates are the average of the Big Five Banks’ 5-year fixed rates in May 2026 and April 2026. Average home prices are from the CREA MLS® Home Price Index (HPI). 

Calgary recorded the largest decline in affordability among the markets studied, with homebuyers needing an additional $4,670 in annual household income to qualify for the average home in June, compared to May. Monthly mortgage payments also increased by $44, or $528 per year. Calgary was one of the few markets where buyers faced a double affordability hit: both home prices and mortgage rates increased in June. The average home price increased by $4,000 month over month, amplifying the impact of higher borrowing costs. 

Halifax was one of only two cities where affordability improved in June, and by the widest margin. Buyers required $1,400 less in annual household income to qualify for the average home, while monthly mortgage payments declined by $35, or $420 annually. The improvement was driven by a substantial $11,400 decline in the average home price between May and June. Hamilton was the only other market to see affordability improve, though by a much smaller margin, with the income required to qualify declining by just $230.

What this means for Canadian homebuyers for the rest of 2026

While the Bank of Canada held its overnight rate at 2.25% in July, providing continued stability for variable-rate borrowers, fixed mortgage rates continue to face upward pressure from elevated bond yields. Many lenders already increased their fixed mortgage pricing before the Bank of Canada announcement on July 15.

The Canadian Real Estate Association recently revised its market outlook in July, projecting a 1.4% dip in annual sales activity for 2026. The national home price average is now anticipated to grow by a marginal 1.1% over the course of the year. These adjustments underscore a persistent sense of hesitation among prospective buyers who are navigating a landscape of financial unpredictability. With housing prices stabilizing and fixed borrowing costs facing upward pressure from continuing geopolitical tensions and shifting trade dynamics with the U.S., housing affordability is unlikely to improve significantly for the remainder of the year.

 

- Aditi Gupta, Content Specialist