Home Affordability Improved in 12 Canadian Cities

Canada’s national average home price fell 2% year-over-year to $682,219 in November 2025, and sales slipped 0.6% month-over-month (and sat 10.7% below last year’s pace). Those aren’t headline-grabbing swings—but they mattered where it counts: monthly payments and the income you need to qualify.

Ratehub’s November 2025 affordability data shows it became easier to buy a home in 12 of 13 major Canadian markets. That’s a big deal for buyers who’ve been waiting for a crack in the door, especially as 2026 planning season kicks in: bonuses get paid, job moves happen, and a lot of households quietly reset their financial goals over the holidays.

Here’s the reality I want you to walk away with: affordability is a moving target. It’s driven by a tug-of-war between home prices, mortgage rates, and the mortgage stress test. November happened to be a month where that tug-of-war favoured buyers—mostly because prices softened, and partly because rates edged down.

What “affordability improved” actually means (and why you should care)

Affordability isn’t a vibe. It’s math.

Ratehub defines affordability by two practical measures:

• The income required to afford the average-priced home in your city
• The monthly mortgage payment associated with that home purchase

Their methodology (as stated in the report) assumes a 10% down payment, 25-year amortization, $4,000 annual property taxes, and $150/month heating. Mortgage rates used are based on the Big Five banks’ average 5-year fixed rates across October and November 2025.

Why this matters for your real life:

• Lenders qualify you using the mortgage stress test, not the contract rate.
• Even small rate changes (like a few basis points) can shift your maximum approved mortgage.
• Price dips often do more for affordability than people expect—because you’re lowering the loan size and the stress-test-qualified payment.

A snippet-worthy way to remember it: If your income is the bottleneck, affordability improvements are basically “qualification relief.”

The interest-rate story behind November’s improvement

November’s affordability lift wasn’t magic—it was the after-effect of rate decisions and bond market moves.

Bank of Canada: the October cut still echoed in November

The Bank of Canada cut 25 basis points on October 29, and that fed into slightly better borrowing conditions.

In Ratehub’s calculations:

• The average 5-year fixed rate used fell to 4.44% in November from 4.47% in October.
• The stress-test rate moved with it: 6.44% in November vs 6.47% in October.

Those numbers look tiny on paper. In lending, they’re not nothing—especially for borrowers right at the edge of qualifying.

Fixed vs. variable: the “discount era” pause

Ratehub’s outlook is blunt: the era of aggressive rate discounts has paused.

As of mid-December 2025, the policy rate is 2.25% (held on December 10). Ratehub notes that variable mortgage rates likely won’t fall much further from around 3.45% in the near term.

On the fixed side, rising bond yields have pushed the lowest 5-year fixed rate to about 3.94%, and bond yields have been jumpy.

My take: if you’re waiting for rates to rescue your budget, you’re betting on the wrong horse. The better strategy is to treat rates as unpredictable and build a purchase plan that works at today’s numbers—with a buffer.

Why 12 cities got easier: prices did the heavy lifting

The big driver in November wasn’t rates—it was prices softening across most markets.

When home prices dip, buyers get hit with a double benefit:

1. Smaller mortgage principal (lower purchase price)
2. Lower stress-test payment (because the loan is smaller, even if rates barely move)

This is why “the market stalling out” can be a buyer’s opportunity. Fewer bidding wars often mean more inspection conditions, more negotiation room, and occasionally a seller who’ll play ball on price.

City spotlight: Hamilton saw the biggest affordability jump

Hamilton led the list for improved affordability.

• Average home price fell $12,500 month-over-month to $734,700.
• Required income dropped by $2,780.
• Monthly mortgage payment fell $76 (about $912/year).

That’s not a life-changing payment drop by itself. But if you’re close to qualifying—or if you’re trying to keep your monthly housing cost under a hard ceiling—$76/month can be the difference between “tight” and “manageable.”

City spotlight: Calgary cooled further

Calgary also improved meaningfully.

• Average home price decreased $11,300 month-over-month to $553,900.
• Required income dropped by $2,470.
• Monthly mortgage payment fell $66 to $2,828.

The bigger story in markets like Calgary is that momentum can change quickly. A hot market cools, listings build, and suddenly buyers aren’t forced into rushed decisions.

The exception: Fredericton got a bit tougher

Fredericton was the one market (of the 13 studied) where affordability worsened.

• Average home price increased $2,700.
• Required income rose by $330.
• Monthly payment increased $9 (about $108/year).

It’s a good reminder that Canadian housing isn’t one market—it’s dozens of local markets reacting differently to supply, jobs, and migration.

What this means for buyers heading into early 2026

Affordability improved in November, but you shouldn’t treat that as a green light to buy impulsively. Treat it as a signal: conditions are loosening in many cities, and that changes how you should prepare.

If you’re buying in the next 120 days: prioritize a pre-approval

A pre-approval does two practical things:

• It tells you what you can actually qualify for under the stress test
• It can hold a rate for a set period (often up to 120 days, depending on lender)

Even if you don’t end up using the pre-approval rate, you gain clarity—and clarity reduces expensive mistakes.

If you’re rate-sensitive: focus on “payment resilience”

Here’s what works in a choppy rate environment:

• Build a budget that works at today’s rate, not a hoped-for lower one
• Keep closing costs and moving expenses out of your down payment fund
• Avoid maxing out your approval just because the bank says you can

A rule I like: If the mortgage payment only works when everything goes perfectly, it doesn’t work.

If you’re choosing fixed vs. variable right now

No one gets this decision perfectly. But you can make it sane.

• Choose fixed if you need predictable payments and would lose sleep over rate spikes.
• Consider variable only if you have cash-flow room, can tolerate payment changes, and understand the risk that rates may not drop soon.

Also: don’t ignore shorter fixed terms if pricing makes sense. A 2- or 3-year fixed can be a reasonable compromise when you think the next few years may look different from the last few.

Quick “people also ask” answers on Canadian home affordability

Is it actually easier to buy a home when rates fall a little?

Yes, but usually not because the rate is slightly lower. The bigger impact comes when price softness reduces the size of the mortgage you need, which lowers your stress-test qualifying payment.

Why does the mortgage stress test matter so much?

Because you’re qualified at the stress-test rate, not the rate you get. Even a small change in the stress-test rate can shift how much mortgage you qualify for—especially for buyers near the edge.

Should you wait for prices to fall more?

Waiting can work, but it’s a gamble. If your plan depends on a further drop, you’re speculating. A better approach is to buy when:

• You plan to stay put long enough to ride out fluctuations
• The payment fits comfortably
• You’ve got a buffer for surprises (repairs, higher utilities, job change)

The smart next step: track rates like a personal finance metric

This post is part of our Interest Rates, Banking & Personal Finance series, and this is exactly why that theme matters: interest rates aren’t “macro news.” They show up in your approval amount, your monthly payment, and your long-term financial flexibility.

November’s data is encouraging—12 of 13 cities improved—but the window can open and close quickly. Fixed rates can rise on bond yields even when the Bank of Canada stands still, and local housing markets can flip based on inventory and sentiment.

If you’re thinking about buying in the next six months, I’d treat affordability reports like this the way you’d treat your credit score: a signal to prepare, not a signal to rush. Get your numbers tight, understand your payment limits, and lock in optionality with a pre-approval.

Where do you think the next affordability pressure point will show up first in 2026—prices, rates, or the job market?