Falling home prices drove affordability gains in 10 cities, with Vancouver leading all markets
Buying conditions improved across most of Canada in July, as declining home values reduced the income needed to qualify for a mortgage in 10 of 13 major cities. That's a reversal from June, when affordability worsened in 11 of those same markets, according to Ratehub.ca's July Home Affordability Report.
The platform's monthly study calculates the qualifying income a buyer would need to purchase the average-priced home in each market, tracking how changes in home prices and mortgage rates affect purchasing power.
This month, price declines did the heavy lifting. The average five-year fixed mortgage rate among Canada's Big Five banks fell by just three basis points, from 4.57% in June to 4.54% in July, bringing the mortgage stress test qualifying rate from 6.57% to 6.54% — too small a movement to drive meaningful change in what buyers need to earn.
"Home price changes were the biggest driver of improved affordability this month," said Jamie David, VP of Mortgages at Ratehub.ca, Ontario.
"The average of the Big Five Banks' five-year fixed rates decreased very slightly, but not enough to meaningfully impact affordability."
Fern Glowinsky of Haventree Bank believes the Bank of Canada is likely to hold rates steady in September, while encouraging borrowers to explore their options as economic and housing market conditions continue to improve.https://t.co/QRWQ3Xwn95
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 20, 2026
Vancouver leads gains as home prices cool
Vancouver recorded the steepest improvement of any market in the study, and remains one of Canada's most-watched housing markets. The income required to purchase the average-priced home fell by $2,540 — from $226,400 in June to $223,860 in July — as the average home price dropped by $10,300, the largest price decline of any city tracked.
Monthly mortgage payments in Vancouver fell by $70, translating to $840 in annual savings compared to purchasing in June 2026.
Hamilton followed with the second-largest improvement: buyers needed $1,850 less in qualifying income as the average home price fell by $7,600, with monthly payments declining by $51, or $612 annually.
Toronto recorded a $1,680 reduction in required income, driven by a $6,200 drop in average home prices. Regina, Winnipeg, and Montréal each recorded home price declines of more than $6,000.
David noted that discounted fixed-rate options remain available below the 4% threshold: "There are still some discounted options available below the 4% mark, including a two-year fixed rate of 3.89% and a three-year fixed rate of 3.94%."
The lowest available insured five-year fixed rate currently sits at 4.09%, 10 basis points higher than last month. Pre-approvals can lock in today's lowest available rate for up to 120 days.
Three cities see affordability worsen
Ottawa, Fredericton, and St. John's were the only markets to record deteriorating affordability in July, though the month-over-month changes were modest.
Ottawa saw required qualifying income rise by just $20, while Fredericton recorded a $430 increase.
St. John's experienced the largest reversal of the three, a $590 rise in required income, alongside a $4,200 jump in average home prices and a $15 increase in monthly mortgage payments.
The Bank of Canada held its overnight rate at 2.25% at its July 2026 announcement, maintaining stability for variable-rate borrowers. Canada's top mortgage brokers coast to coast are watching the Bank's next scheduled decision on September 2 for further direction on variable and fixed product pricing as the fall lending season approaches.
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