You’ll need a $200,000+ income if you want to get a typical mortgage in Toronto or Vancouver
Too high real estate prices and growing interest rates during this year have made it even more difficult for potential homebuyers to qualify for an average mortgage. The RBC’s affordability measure has reached its worst level on record.
The bank’s third-quarter report shows that RBC’s aggregate affordability measure was up by as much as 14.5% over the past year and reached 62.7%.
“Buyers have to deal with significantly higher ownership costs in every market we investigate,” – says the report author Robert Hogue.
The strongest pressures are reported in Vancouver and Toronto, where in order to qualify for an average home, buyers need to show an income of $268,000 and $240,000, respectively. Victoria comes third with at least $216,000.
Not only the citizens of Canada’s most expensive cities are facing this issue. Buyers in mid-sized markets from all over the country also have to deal with it. Here’s a list of the minimum incomes necessary to qualify for a mortgage on a typical home in different cities across the country:
- Ottawa: $149,000
- Montreal: $127,000
- Calgary: $123,000
- Halifax: $116,000
- Edmonton: $99,000
- Saskatoon: $89,000
- Regina: $79,000
- Saint John: $74,000
- St. John’s: $77,000
The light at the end of the tunnel for buyers is the fact that the latest correction in real estate prices is expected to ease affordability pressure next year, RBC believes.
“In our opinion, the national benchmark price will go down by 14% from its early 2022 peak, bringing much more possibilities to reduce ownership costs as soon as interest rates stabilize,” – Hogue noted.
This trend is expected to start in early 2023, supported partially by growing household incomes.
“Nevertheless, we’ll still face difficulties in the nearest future, as the affordability issues will not just disappear quickly,” – he added. “It will probably take years to fully offset the massive deterioration that we’ve seen since 2021.”