It became tougher to afford a home in nearly all Canadian markets in June
June 2025 Ratehub.ca Affordability Report
Rising mortgage rates have made it progressively tougher to buy a home in recent months, and June was no exception; according to the latest Affordability Report from Ratehub.ca, affordability conditions worsened across the country, with declines in 12 out of 13 major markets.
The report, which crunches monthly real estate and mortgage data to provide a real-time snap shot of buying conditions, defines affordability as the amount of income it would require to qualify for a mortgage on the average-priced home in each housing market, and the corresponding monthly mortgage payments. The calculation takes into account housing price data, mortgage rates, and the mortgage stress test rate.
Steeper borrowing costs were the main factor behind reduced affordability in June – the average five-year fixed rate used by the study rose to 4.48%, compared to 4.38% in May. That in turn pushed up the mortgage stress test rate to 6.48%; this is a qualification hurdle that requires mortgage applicants to prove they could still afford to make their mortgage payments at a rate 2% higher than the one they actually receive from their lender.
Upward pressure has been steadily building under fixed mortgage rates in recent weeks, as bond yields have ticked higher in response to economic data, and ongoing trade war volatility. Variable mortgage rates, meanwhile, appear to have hit a stagnant patch. While economists had initially expected the Bank of Canada to cut its trend setting overnight lending rate – which influences the pricing for variable rates – in the second half of 2025, stubborn inflation and stronger-than-expected jobs numbers have given the central bank little rationale to change rates.
That all offers borrowers little in terms of rate relief, and combined with rising home prices in seven markets, further whittled their overall affordability.
June 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 May and June 2025. Average home prices are from the CREA MLS® Home Price Index (HPI).
In June, St. John’s topped the list in terms of worsening affordability, as the average home price there rose by $9,500 to $387,800. As a result, the required income to qualify for a mortgage rose by $2,450, with households needing to bring in $88,910. This is the second month where St. John’s topped the list of cities that saw an increase in income required to purchase a home.
Toronto, meanwhile, was the only city this month that saw improvement in affordability ($1,160 less income required to purchase the average home). This is due to a massive month-over-month home price drop of $17,700, bringing Toronto’s average home price under $1 million.
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Will home affordability continue to worsen in Canada?
Over the first half of 2025, those who were active in the housing market enjoyed a rare combination of lower mortgage rates and softer home prices – but it appears those days are numbered. The most recent June data from the Canadian Real Estate Association (CREA) revealed home sales continued to recover over the course of the month, rising 3.5% year over year. While the average price overall dipped slightly compared to 2024, that varied between regional markets, with many experiencing an uptick.
“Most housing markets continued to turn a corner in June, although market conditions still vary considerably depending on where you are in Canada,” said Valérie Paquin, CREA Chair. “If the spring market was mostly held back by economic uncertainty, barring any further big shocks, that delayed activity could very likely surface this summer and into the fall.”
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Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.