Boost for buyers as most big Canadian cities see 2025 affordability improve

The affordability outlook improved in eight of 13 major Canadian cities n 2025 as falling mortgage rates and lower home prices reduced the income required to purchase a home, according to Ratehub.ca’s latest affordability report.

Hamilton recorded the largest improvement, with the income needed to buy an average home falling by $18,610 between January and December 2025. A borrower in the city would pay $511 less per month on a mortgage, or $6,132 less per year, based on the report’s calculations.

Toronto followed closely, with the income required to purchase an average home down by $18,590 over the same period. Vancouver rounded out the top three cities for improved affordability, with a $15,100 decline in required income.

The report analyzed mortgage rates, stress-test rates, and real estate prices across Canadian cities, using a scenario based on a 10% down payment, a 25-year amortization, $4,000 in annual property taxes, and $150 in monthly heating costs. Mortgage rates reflected the average of the Big Five banks’ five-year fixed rates for each month, while average home prices were drawn from the Canadian Real Estate Association’s MLS Home Price Index.

However, five cities saw affordability worsen despite lower mortgage rates. St. John’s recorded the largest deterioration, with buyers needing $4,810 more in income to purchase an average home. The city’s average home price rose by $33,200, the biggest increase among all cities studied.

“While mortgage rates fell from the start of the year, it wasn’t enough to offset the home price increases in these five cities,” Ratehub's Penelope Graham said.

Montreal, Regina, Winnipeg, and Fredericton also posted smaller increases in required income, ranging from $470 to $2,420.

The data showed mortgage rates declined through 2025, with the average five-year fixed rate falling from 4.70% in January to 4.46% in December. The stress-test rate also eased, dropping from 6.70% to 6.46% over the same period.

Graham noted that borrowers could achieve greater savings by securing rates below the Big Five average. The best five-year fixed rate on Ratehub.ca currently stands at 3.84%, which could save borrowers $211 per month compared with average rates.

“If you’re currently shopping for a home or coming up for a renewal, it’s a good idea to take a look at what rates are currently available to you,” Graham said.

CMP

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