According to the latest Affordability Report from Ratehub.ca, rising mortgage rates have made it progressively tougher to buy a home in recent months, and June was no exception. 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.
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