Home affordability improved in 11 major Canadian cities in September
Aditi Gupta, Content Specialist
After months of strained budgets, homebuyers finally caught a break in September. Softer home prices and stable borrowing costs gave affordability a lift across much of the country.
According to Ratehub.ca’s latest affordability report, 11 out of 13 major cities saw it become easier to purchase a home compared to August. The monthly analysis tracks how changes in mortgage rates, stress test levels, and home prices affect the income needed to qualify for a mortgage on the average-priced home, as well as the resulting monthly payment.
Falling home prices drove the major improvement
With mortgage rates holding steady, softer home prices across most major markets made it easier for buyers to qualify for a home purchase in September.
“It got easier this month to afford a home in the majority of the cities we studied,” says Ratehub.ca Mortgage Expert Penelope Graham.
“Mortgage rates were relatively flat month-over-month, which means home prices were the primary driving factor for the improvement. Home prices had decreased in the majority of the cities we looked at.”
The average five-year fixed mortgage rate edged down slightly to 4.47% from 4.49%, while the mortgage stress test eased to 6.47% from 6.49%. Those small shifts meant borrowing costs changed very little — but home prices fell in 11 of the 13 cities studied, leading to lower required incomes and smaller monthly payments.
Toronto saw the biggest improvement in affordability, with the average home price down $9,400, cutting the income needed to buy by $2,130 and reducing the monthly mortgage payment by $58. Vancouver followed closely, with prices falling $8,300 and the required income dropping by $2,000.
Calgary, Regina, and Victoria also saw noticeable affordability gains, each requiring roughly $900 to $1,100 less income compared to August.
In contrast, only Montreal and Halifax bucked the trend, as modest price increases pushed the income required to buy up by $1,040 and $210, respectively.
September 2025: How much did 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 August and September 2025. Average home prices are from the CREA MLS® Home Price Index (HPI).
Will Canadian real estate get more affordable in 2025?
With mortgage rates stabilizing and market activity holding strong, the fall housing season is shaping up to be more balanced than any in recent years.
Latest data by the Canadian Real Estate Association (CREA) showed that national home sales were 5.2% higher than last year in September, marking the most active fall market since 2021. While house prices remain lower than they were a year ago, they’ve largely levelled off since spring, suggesting the market may be entering a period of relative stability.
That stability is critical as borrowers look ahead to the next Bank of Canada rate announcement on October 29. The central bank’s latest rate cut in September has already pushed the lowest five-year variable mortgage rate on Ratehub.ca to 3.70% — the lowest since mid-2022. Compared to the earlier 3.95% variable rate, today’s 3.70% variable rate would save a borrower about $84 per month, or $1,008 per year, on an average-priced home of $676,154.
Fixed mortgage rates have also moved lower in recent weeks, due to softening bond yields; the lowest five-year fixed option now sits just nine basis points higher than the lowest variable rate, at 3.79%. On an average-priced home of $676,154, that rate can translate to savings of roughly $233 per month, or $2,796 per year.
For buyers or homeowners coming up for renewal, this may represent a short-lived window of opportunity. If inflation data continues to cooperate, the Bank could signal more easing ahead — but for now, rate watchers expect a hold as policymakers assess how previous cuts are filtering through the economy.
Either way, the message for borrowers is the same: affordability is improving slowly but surely, and locking in today’s rates could make a tangible difference heading into 2026.
Also read:
Aditi Gupta, Content Specialist
Aditi Gupta is a content specialist at Ratehub, with a focus on creating informative content about mortgages.