Canadian home affordability improved in 10 of 13 markets in July 2026

Buying a home became slightly more affordable across much of Canada in July, as declining home prices and a modest drop in mortgage rates helped reduce the income buyers need to qualify for a mortgage. According to Ratehub.ca’s July Home Affordability Report, affordability improved in 10 of the 13 Canadian cities analyzed. For the monthly study, Ratehub.ca calculates the income a buyer would need to qualify for a mortgage on the average-priced home in each market, allowing us to track how changes in home prices and mortgage rates affect affordability month over month.

Falling home prices helped improve affordability in July

Home prices declined in 10 of the 13 cities included in Ratehub.ca’s analysis, led by Vancouver, where the average home price fell by $10,300. Hamilton followed with a $7,600 decline, while Regina saw prices fall by $6,600. Toronto, Winnipeg and Montréal each recorded decreases of more than $6,000.

Borrowing costs also edged lower, with the average five-year fixed mortgage rate among Canada’s Big Five banks declining from 4.57% in June to 4.54% in July. This brought the mortgage stress test rate used in Ratehub.ca’s calculations down from 6.57% to 6.54%. However, the three-basis-point decrease in the average mortgage rate was relatively small and did not meaningfully contribute to July’s improvement in affordability.

The results mark a notable reversal from June, when affordability worsened in 11 of the 13 markets analyzed by Ratehub.ca. This month, softer home prices were enough to lower the income needed to qualify in most of the cities studied.

July 2026: How much do you need to earn to buy a home in Canada?

This report is for illustration purposes only. Data is based on a mortgage with a 10% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating. Mortgage rates are the average of the Big Five Banks’ 5-year fixed rates in July 2026 and June 2026. Average home prices are from the CREA MLS® Home Price Index (HPI). 

Ratehub.ca’s calculations show Vancouver saw the largest improvement in affordability in July. 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. Monthly mortgage payments decreased by $70, or $840 per year, compared to someone purchasing the average-priced home in June.

Hamilton recorded the second-largest improvement, with buyers needing $1,850 less in annual income to qualify for the average home. The average home price fell by $7,600, while monthly mortgage payments declined by $51, or $612 per year. Toronto followed closely behind, with the required income falling by $1,680 as the average home price declined by $6,200. Monthly mortgage payments in Toronto fell by $47, or $564 annually.

Only three cities saw affordability worsen in July: Ottawa, Fredericton and St. John’s. However, the month-over-month changes were relatively small. The income required increased by just $20 in Ottawa, $430 in Fredericton and $590 in St. John’s. St. John’s recorded the largest deterioration of the three, alongside a $4,200 increase in the average home price and a $15 increase in monthly mortgage payments.

What this means for Canadian homebuyers for the rest of 2026

July’s improvement offers some relief for prospective buyers, but whether affordability continues to improve will depend largely on where home prices and mortgage rates head next. On the borrowing side, the Bank of Canada held its overnight rate at 2.25% in July, maintaining stability for variable-rate borrowers. The Bank’s next interest rate announcement is scheduled for September 2, which will provide further direction on the outlook for variable mortgage rates heading into the fall. 

Fixed mortgage rates, meanwhile, remain more sensitive to movements in Government of Canada bond yields. The lowest available insured five-year fixed mortgage rate is currently 4.09%, 10 basis points higher than last month. However, there are still discounted fixed-rate options available below the 4% mark, including a two-year fixed rate of 3.89% and a three-year fixed rate of 3.94%. Prospective buyers can also consider getting a mortgage pre-approval to secure today’s lowest available rate for up to 120 days.