Home affordability improved in September. Did buyers notice?

Home affordability improved in September, but modest decreases in qualifying income and monthly mortgage payments aren’t likely to move the needle for most buyers this fall.

According to Ratehub.ca’s latest home affordability report, affordability improved in 12 of 13 major Canadian housing markets. Home buyers in Halifax, Ottawa and Victoria enjoyed the largest increases in affordability. Fredericton was the only market included in the study that saw affordability erode.  

With fixed mortgage rates inching up again last month — the average five-year fixed rate among Canada’s largest banks rose one basis point to 4.56% in September — the increased buying power was entirely the result of softer home prices. 

The current rate environment isn’t likely to do buyers any favours in the coming weeks. 

Three- and five-year government bond yields, which lenders use to price their fixed rates, are almost a full percentage point higher than they were prior to the war in Iran. Those elevated yields have pushed the lowest available five-year fixed rate to 4.34%, up 10 basis points from last month. Until yields fall, expect fixed rates to hover at their current levels. 

Ratehub's affordability analysis looks at the income required to purchase the average-priced home in 13 major Canadian cities. It uses national real estate data on home prices, mortgage rates, and the mortgage stress test to show how much a prospective buyer would need to earn to qualify for a mortgage on the average-priced home in their local market.

Thank lower home prices for September’s affordability bump

The average sale price declined in almost every market included in Ratehub’s affordability analysis. The only exception was Fredericton, where the average price rose by $200, or about 0.05%.

While affordability technically decreased in Fredericton, it did so to such a minor extent that home buyers shouldn’t even feel it. That $200 increase in the average sale price added $3 to the average mortgage payment.

On a monthly basis, home prices slid the furthest in Halifax (-$22,100), Ottawa (-$14,200) and Victoria (-$10,300), the three markets where affordability improved the most:

• In Halifax, the average mortgage payment decreased by $111 per month, which would save a home buyer $1,332 per year. The income required to qualify for an average priced home in the city fell by $4,160.

• In Ottawa, the average mortgage payment decreased by $70 per month, creating annual savings of $840. The income requirement for an average priced home in the nation’s capital dropped by $2,630.
• In Victoria, the average mortgage payment decreased by $49, saving home buyers $588 per year. The income required to purchase an average priced home in Victoria decreased by $1,840.

Affordability improved in critical markets like Toronto and Montreal, but to a lesser degree. 

The average mortgage payment edged down by $38 in Toronto and by $27 in Montreal. Those aren’t game-changing declines, but they’re a step in the right direction. A soft autumn housing market, bogged down by high gas prices and economic uncertainty, could exert even more downward pressure on prices in Ontario and Quebec before the end of 2026. 

Here's a detailed look at how affordability changed in September:

September 2026: 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 September 2026 and August 2026. Average home prices are from the CREA MLS® Home Price Index (HPI).

When will buying a home in Canada be more affordable?

When average mortgage payments dip by less than $20, like they did in Calgary, Edmonton, Winnipeg and St. John’s last month, it’s only fair for home buyers to wonder when they might catch a tangible break on their mortgages. 

It could be a while.

For mortgage costs to ease significantly, both home prices and mortgage rates typically need to decrease. Home prices are softening here and there, but lenders’ hands are tied where rates are concerned.

Bond yields have to fall before Canadians can access lower fixed rates. Considering the influence high oil prices are having on yields, it may take re-opening the Strait of Hormuz, or a few concrete steps toward a peaceful resolution of the U.S.-Iran conflict, to bring yields and fixed rates back down to Earth.

Then again, if fixed rates were to drop and sit comfortably under 4%, the lower borrowing costs could trigger a wave of pent-up demand. In that scenario, the price declines that are carving out more affordability for home buyers might quickly vanish.

What are the options for home buyers struggling with affordability in 2026? 

There are a few options worth exploring If you’re looking for a way to crack Canada’s still-challenging housing market this year:

• • Go variable. As of October 19, 2026, the lowest 5-year variable rate in Canada is 3.45%, almost a full percentage point lower than the lowest five-year fixed. A variable rate could secure you a lower mortgage payment, but make sure you have room in your budget to support possible rate increases during your term. 
  • Increase your down payment. Paying more upfront may not sound like an affordability play, but it could lead to longer-term savings. A larger down payment lowers your mortgage amount and the interest you'll pay. A 20% down payment frees you from paying mortgage default insurance. 
  • Wait for prices to fall even further. Economic uncertainty could throw a bucket of ice water on the fall housing market. Your patience could be rewarded with further affordability gains, but only if you’re ready to act once prices are thudding against the bottom.

Whatever path you choose, getting pre-approved for a mortgage should generally be your first step — especially when mortgage rates are this volatile. 

With a pre-approval, you can lock in at today’s rates and be cushioned against further rate increases, generally for at least 120 days. A pre-approval is also an excellent opportunity to speak with a mortgage broker about your homeownership goals, where rates appear to be heading and other possibilities for improving affordability.