Qualifying income thresholds rose in every city as fixed rates and home prices climbed in May
Prospective home buyers across Canada saw their purchasing power erode in May 2026, as mortgage affordability slid in every one of the 13 major cities tracked by Ratehub.ca.
The monthly study, which measures the annual income a borrower needs to qualify for a mortgage on an average-priced home, found that modestly higher fixed rates and rising home prices combined to push qualifying thresholds higher from coast to coast.
"Our latest home affordability analysis found that home affordability worsened in all of the cities we studied," said Penelope Graham, mortgage expert at Ratehub.ca in Toronto.
Rates and prices tighten in tandem
Two forces converged against buyers last month. The average five-year fixed rate across Canada's big five banks edged up to 4.49% in May, from 4.47% in April, a modest move, but enough to lift the mortgage stress test rate to 6.49%.
Demand was also firming up. According to the Canadian Real Estate Association (CREA), national home sales rose 5.5% month-over-month in May 2026, and the national average home price climbed to $702,079, its highest level in two years and the first time it has crossed the $700,000 mark in 23 months.
"Both mortgage rate and home price changes impacted home affordability this month," Graham said.
"Home prices were up in the majority of the cities and the average of the Big Five Banks' five-year fixed rates increased slightly, but enough to have an impact on the income required to buy a home."
Canada's already-strained affordability picture has proved difficult to improve, with structural gaps in supply compounding the challenge. The deeper forces driving Canada's persistent housing unaffordability crisis, including the cost-of-delivery pressures flagged by economists, suggest rate changes alone are unlikely to provide lasting relief.
A market of uneven pressures
The impact was not uniform. St. John's, Newfoundland saw the steepest deterioration: buyers there now need $2,800 more in annual income to qualify for the average home. That translates to $75 more per month, or $900 more per year, compared with April.
Hamilton, Ontario followed, requiring $1,480 more in annual income as the average home price rose to $744,000.
Ottawa buyers need $1,260 more, with average prices reaching $635,300.
In Canada's two most expensive markets, the qualifying bar also moved higher. Vancouver buyers need an annual income of $225,200, up $900 from April, to afford an average home now priced at $1,100,700.
Toronto borrowers face a required income of $195,720, up $780, on an average price of $946,500.
Calgary and Halifax saw more modest increases of $660 and $540 respectively, while Prairie markets Edmonton and Winnipeg registered the smallest gains outside Québec, at $240 and $170.
Montréal, notably, was the only city where average home prices actually declined month-over-month, dropping $1,000 to $593,400, yet qualifying income still crept up by $10 due to the rate change, adding just $1 to the monthly payment.
For brokers working in Ontario and British Columbia, the national figure can obscure very different local conditions. In a recent interview with Canadian Mortgage Professional, Sal Guatieri, senior economist and director at Bank of Montreal (BMO) Capital Markets, said Ontario had not yet turned a corner.
"We're getting closer to more reasonable affordability in the Ontario housing market," Guatieri said. "We're not quite there yet."
For buyers who have been waiting, the data points to a narrowing window. Graham's advice is direct: "As conditions are anticipated to pick up in markets across Canada, it's important to have an idea of how differing price points and borrowing costs may impact your buying budget."
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