Canadian rates peaked in 1981 at around 22% but the house cost three times income. Today's buyer in Toronto faces a huge hurdle
When I read new analysis from KPMG in Australia this week, it confirmed what many Canadian mortgage brokers have suspected for years: when you measure total interest payments as a share of household income, today's borrowers are carrying more than the generation that faced double-digit rates. Yes, the headline rate was higher then. But the house was cheaper. The debt was smaller.
The Bank of Canada prime rate peaked in 1981, at around 22%. By 1989 it had already fallen to 13-14% and was declining. So when a Canadian client's parent says "we survived 20% rates," they are probably right. The monthly pain was real. But the house they bought in 1981 cost roughly three to four times their household income. The mortgage on that house, even at 20%, was smaller in absolute terms than the mortgage a first home buyer in Toronto or Vancouver takes on today.
As Mortgage Introducer reported this week, the same structural argument holds across markets where prices have outrun incomes for three decades. In Canada, it holds with particular force.
The numbers
The national average sale price was $673,335 in December 2025, according to the Canadian Real Estate Association - roughly unchanged from December 2024 but up around 57% from the national average of approximately $430,000 in 2015. The National Bank of Canada Housing Affordability Monitor puts the national mortgage payment as a percentage of household income at 52.3% in Q1 2026 - still well above its long-term average of 40.6% since 2000, even after nine consecutive quarters of improvement.
The national figure conceals the extremes. In Toronto, buying the average home ($941,800) requires a household income of roughly $207,000 to qualify at current rates, according to Ratehub's March 2026 Affordability Report. The National Bank Monitor puts the Greater Toronto Area mortgage payment to income ratio at 70.9% in Q1 2026 - above its long-term average of 54.4%. In Vancouver, the ratio of house prices to median income is among the highest of any city in the developed world. The median first-time buyer age in Vancouver is now 46, and in Toronto it is 40, according to a November 2025 global analysis by Bloom Holding.
Read that again. The median person buying their first home in Vancouver is 46 years old.
In the early 1980s, the generation now citing their high rates got on the ladder in their mid to late twenties at three to four times their income. The rate was brutal and temporary. The debt was smaller and manageable. By the time rates fell - and they fell dramatically through the 1980s and 1990s - those buyers held an asset that had appreciated substantially and a mortgage that had become cheap to service.
Three things the comparison omits
Prices have left incomes behind. CREA data shows the national average home price rose from approximately $430,000 in 2015 to $673,335 in December 2025 - a rise of around 57%. Statistics Canada's Survey of Employment, Payrolls and Hours shows median wage growth of roughly 15-18% over the same period. CMHC's 2026 Housing Market Outlook calculates that Canada needs to build between 430,000 and 480,000 homes per year through 2035 just to restore 2019 affordability levels - itself an acknowledgment that prices have moved structurally beyond income growth.
The deposit timeline has extended, not shortened. CMHC's 2025 Mortgage Consumer Survey found the average time to save a down payment was 3.4 years nationally. That sounds manageable until you look at the cities. Vancouver's median first-time buyer age of 46 reflects a saving period that, for most buyers, extends well over a decade. The 1981 generation did not face a decade of saving before they could start paying those high rates.
The new 30-year amortization is a symptom, not a solution. Canada extended insured mortgage amortization to 30 years for first-time buyers in December 2024. The intention was to reduce monthly payments and improve access. The structural effect is to spread a much larger debt across a longer period - reducing the monthly number while increasing total interest paid over the life of the loan. A 25-year mortgage at 20% on a $150,000 house costs less in total interest than a 30-year mortgage at 5% on a $700,000 house.
The rate was higher. But.
The rate was higher, briefly, in 1981. The house was three to four times income. The deposit took three or four years to save. The mortgage was paid off in 25 years. Today's buyer in Toronto or Vancouver faces a house at twelve times income, a deposit that consumes a decade of saving, and an amortization period stretched to 30 years to make the monthly payment bearable - at a rate that, while lower in percentage terms, applies to a debt that is structurally much larger.
The National Bank of Canada Housing Affordability Monitor's Q1 2026 report puts it plainly: even after the longest streak of consecutive affordability improvement ever recorded, the national mortgage payment as a share of income remains "well above its long-term average." CMHC's 2026 Housing Market Outlook describes the year ahead as likely to be "one of the weakest in recent decades" for housing demand, with prices showing only modest movement and supply still running well short of what is needed to restore affordability.
That is the context in which your clients are making the biggest financial decision of their lives. This is why they need your help.
