Though prices have been falling, the income required to purchase a home in these markets still remains elevated due to higher stress test rates
You'll need to be making more than $220,000 to buy a home in Toronto and Vancouver with a 20 per cent down payment, according to new data from Ratehub.ca.
Across all Canadian cities, the annual income needed to buy a home has jumped by $18,000 on average in just the last four months. "Home prices will need to drop significantly in order to neutralize the effects that higher mortgage rates have on the stress test," Ratehub.ca co-CEO James Laird said in a statement. "Unless this happens, home affordability will continue to be impacted significantly by the current rising rate environment."
Kavcic said the hike which prompted the commercial banks to increase their prime rates has made it more difficult to qualify for a mortgage under Canada’s stress test rules.The stress test sets the qualifying rate for uninsured mortgages at either two percentage points above the contract rate or 5.25 per cent, whichever is greater.
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