National Bank data shows a 10th straight quarterly improvement, but costs still far exceed historical norms
Canadian housing affordability improved for a tenth consecutive quarter in Q2 2026, the longest unbroken streak ever recorded in the country. Falling home prices stepped in to drive gains that lower mortgage rates can no longer deliver.
The mortgage payment as a percentage of income (MPPI) — National Bank of Canada's key affordability metric — fell 1.1 percentage points to 51.1% nationally in Q2 2026, its lowest level in approximately four years, according to the National Bank of Canada Housing Affordability Monitor authored by senior economist Kyle Dahms.
The national composite index, which tracks 10 major census metropolitan areas, has now declined 11.4 percentage points from its Q4 2023 peak of 62.5%.
The composition of that recovery, however, is shifting in ways that matter for brokers advising clients on timing and market selection.
Falling mortgage rates drove 5.1 percentage points of the total improvement since the Q4 2023 peak. Higher incomes contributed 4.2 points.
Falling home prices accounted for just 2.1 points, yet in Q2 2026 alone, price declines were responsible for 1.1 points of improvement, with income gains adding a further 0.4 points.
Rising mortgage rates, which climbed seven basis points in Q2 and stood nine basis points above their year-earlier level, the first annual increase in eight quarters, eroded 0.4 points.
A tale of two recoveries
Affordability improved in six of the ten markets tracked in Q2: Vancouver, Toronto, Hamilton, Calgary, Ottawa-Gatineau, and Victoria. All six benefited from price declines outpacing the drag from higher financing costs.
Conversely, Quebec City, Winnipeg, Montreal, and Edmonton saw conditions worsen, driven by home price increases. Quebec City's 3.5% quarterly rise in prices was the sharpest among all markets covered.
Vancouver delivered the fastest year-over-year improvement nationally, with the MPPI falling 8.7 percentage points over the past four quarters to 79.4%, still the least affordable reading in Canada by a wide margin, and 13.2 percentage points above its long-term average since 2000.
A non-condo home in Vancouver requires a buyer to save for 398 months at a 10% savings rate to accumulate a minimum down payment, the report noted.
Toronto's MPPI fell to 68.3% in Q2, the tenth consecutive quarterly improvement for the city and a 22.6-point decline from its Q4 2023 peak.
Meanwhile, Edmonton remains the most affordable major market nationally with an MPPI of 33.4%, well below the national composite, despite a modest 0.2-point deterioration in Q2. Calgary, at 38.5%, also sits well below the national urban average.
Source: National Bank of Canada Housing Affordability Monitor, August 14, 2026 (all dwellings, 25-year amortization, 5-year term). Homeownership rate from 2021 Census.
| City | MPPI | Q/Q change | Median home price | Monthly mortgage payment | Homeownership rate (2021) |
|---|---|---|---|---|---|
| Composite 10 | 51.1% | −1.1 pp | $761,179 | $4,089 | 66% |
| Vancouver | 79.4% | −2.6 pp | $1,174,406 | $6,309 | 62% |
| Victoria | 73.9% | −0.7 pp | $1,035,185 | $5,561 | 62% |
| Toronto | 68.3% | −2.5 pp | $1,043,885 | $5,608 | 65% |
| Hamilton | 57.5% | −1.4 pp | $841,695 | $4,522 | 69% |
| Montréal | 45.2% | +0.6 pp | $599,695 | $3,222 | 54% |
| Ottawa-Gatineau | 42.4% | −0.8 pp | $682,550 | $3,667 | 65% |
| Calgary | 38.5% | −0.8 pp | $658,159 | $3,536 | 71% |
| Quebec City | 38.5% | +1.4 pp | $500,550 | $2,689 | 58% |
| Winnipeg | 33.5% | +0.9 pp | $443,653 | $2,383 | 66% |
| Edmonton | 33.4% | +0.2 pp | $494,155 | $2,655 | 69% |
MPPI = mortgage payment as a percentage of median household income. Q/Q change shown in percentage points (pp). Green = improved quarter-over-quarter; red = worsened.
Looking ahead: prices must do the heavy lifting
National Bank's report makes clear that mortgage rate relief is no longer available as a driver of further affordability gains.
With rates expected to remain stable or rise modestly over the next year, the path to continued improvement runs through home prices and income growth, both of which the bank characterised as uncertain.
National Bank's economists had flagged that the improvement streak could face pressure, noting mortgage rates resumed an upward trend following expectations of tighter monetary policy.
Slower population growth is expected to constrain housing demand and help contain prices, while the improving labour market should support household incomes, though the report cautions that gains will narrow without price moderation.
Despite a decade-long run of quarterly improvements, the Composite 10 index remains 10.4 percentage points above its long-term average since 2000.
Affordability is worse than historical norms in every metropolitan area covered, with Hamilton, Victoria, and Quebec City each sitting more than 14 percentage points above their respective long-term averages.
Brokers advising clients on mortgage options in a shifting Canadian housing market should note that the drivers of relief are narrowing even as headline numbers improve.
As Canada's uneven affordability has shown, client conversations in Vancouver and Toronto look fundamentally different from those in Calgary or Edmonton.
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