Why Are Mortgage Rates So High in Canada?

The spring housing market has clearly cooled. Home sales across Canada fell 9.8% month over month and more than 10% year over year, according to the Canadian Real Estate Association (CREA), which pointed to tariff uncertainty as a major factor behind the slowdown.

Many buyers are understandably cautious. Even though proposed tariffs are not yet in force, ongoing uncertainty about their scope and timing has shaken consumer confidence and raised concerns about a possible economic slowdown—hardly reassuring for anyone worried about employment or savings as they consider buying a home.

That said, there is a silver lining for active buyers: overall affordability has improved in several major markets, mainly because mortgage rates have fallen recently, offsetting price increases in some cities.

Ratehub.ca’s February Home Affordability Report found that the income required to qualify for a mortgage on an average-priced home declined in eight of 13 major markets. The analysis measures affordability by the income needed to qualify for a mortgage, combining monthly real estate data with current mortgage and stress-test rates to show how conditions have changed month over month.

Mortgage rates eased after the Bank of Canada’s rate cut on January 29, and falling bond yields helped push fixed mortgage rates lower. In the study, the average five-year fixed mortgage rate fell from 4.7% in January to 4.55% in February, and the corresponding mortgage stress test rate moved down to 6.55%.

Below is a breakdown of how these changes affected buyers in Canada’s largest housing markets.

Housing affordability across Canada’s major cities

The chart below summarizes how affordability changed between January 2025 and February 2025 in Canada’s main housing markets, using the income required to qualify for a mortgage as the primary measure.

To view more of the data, scroll the table horizontally on a touchscreen or use Shift + scroll wheel on a mouse.

February 2025: Home affordability report

City	January average home price	February average home price	Change in home prices	January mortgage payment	February mortgage payment	Change in payments	January income required	February income required	Change in income
Hamilton	$819,500	$812,600	-$6,900	$4,294	$4,194	-$100	$174,450	$171,000	-$3,450
Toronto	$1,070,100	$1,073,900	$3,800	$5,607	$5,543	-$64	$223,290	$221,200	-$2,090
Vancouver	$1,174,400	$1,185,100	$10,700	$6,153	$6,117	-$36	$243,600	$242,600	-$1,000
Calgary	$573,100	$576,800	$3,700	$3,003	$2,977	-$26	$126,470	$125,700	-$770
Victoria	$870,100	$878,700	$8,600	$4,559	$4,535	-$24	$184,300	$183,700	-$600
Regina	$316,300	$317,700	$1,400	$1,657	$1,640	-$17	$76,470	$75,910	-$560
St. John’s	$367,600	$371,300	$3,700	$1,926	$1,916	-$10	$86,450	$86,210	-$240
Ottawa	$649,900	$658,300	$8,400	$3,405	$3,398	-$7	$141,420	$141,340	-$80
Winnipeg	$363,200	$373,700	$10,500	$1,903	$1,929	$26	$85,600	$86,670	$1,070
Montreal	$549,900	$562,300	$12,400	$2,881	$2,902	$21	$121,950	$122,900	$950
Edmonton	$412,200	$421,800	$9,600	$2,160	$2,177	$17	$95,150	$95,910	$760
Halifax	$550,500	$561,400	$10,900	$2,884	$2,898	$14	$122,070	$122,730	$660
Fredericton	$338,800	$343,800	$5,000	$1,775	$1,775	$0	$80,850	$80,920	$70

Canadian cities where affordability improved

Affordability improved in several major markets in February, largely because lower mortgage rates offset price gains or modest price declines. Below are notable examples where the income required to qualify for a mortgage fell.

Hamilton: Bearing the correction brunt

Ontario’s Greater Golden Horseshoe region saw some of the largest sales declines, and Hamilton was particularly affected. Transactions dropped about 35% year over year in February, according to the Realtors’ Association of Hamilton-Burlington, and the city’s average home price eased by $6,900 to $812,600. Combined with lower mortgage costs, the income required to qualify for a mortgage in Hamilton fell by $3,450, and the average monthly mortgage payment dropped $100 to $4,194.

Toronto: A spring marked by slowing sales

Tariff concerns reduced demand in Toronto as well. Transactions in the city fell by more than a quarter in February, according to the Toronto Regional Real Estate Board. Although the average home price in Toronto rose slightly month over month to $1,073,900, lower rates reduced the income needed to qualify by $2,090 and trimmed the average monthly mortgage payment by $64 to $5,543.

Vancouver: Below the seasonal average

Vancouver sales have also fallen, running well below the 10-year seasonal average. While prices remain the highest in Canada and rose by about $10,700 in February to an average of $1,185,100, lower mortgage rates slightly reduced the monthly payment and cut the required income by roughly $1,000.

Canadian cities where affordability worsened

In five of the 13 markets, affordability worsened in February. These markets tend to have lower average prices—under $600,000—and are experiencing rising sales and shrinking inventories, which pushed prices and required incomes higher.

Winnipeg: Into sellers’ market territory

Winnipeg’s market warmed in February: sales rose and listings fell, resulting in a price uptick to $373,700. The higher price increased the income needed to qualify for a mortgage by $1,070 and raised the average monthly payment by $26 to $1,929.

Montreal: Reaching pre-pandemic conditions

Montreal saw strong demand in February that was comparable to the two years prior to the pandemic, with sales up about 7% year over year. Bidding activity for single-family homes increased, helping push the average price up by $12,400 to $562,300 and raising the required income by $950.

Edmonton: Sales continue to rise

The Greater Edmonton Area recorded another month of rising sales that outpaced new listings. Prices climbed $9,600 to $421,800 in February, and the income required to qualify increased by $760.

How much mortgage can you afford? How much house can you buy?

Ratehub.ca’s monthly affordability study tracks how buying conditions change in 13 major Canadian markets. Affordability is measured by the income a buyer needs to qualify for a mortgage on an average-priced home, calculated using local price data, current mortgage rates and the mortgage stress test rate. The report also shows the resulting monthly mortgage payment in each city and how that payment changes month to month. If you’re house hunting, use a mortgage affordability calculator to run your own numbers and understand what you can afford.

What’s next for Canadian mortgage rates in 2025?

The outlook for mortgage rates remains uncertain. Financial markets have reacted to tariff uncertainty by pushing rates down in the short term. But aggressive additional rate cuts from the Bank of Canada now seem less likely, especially after recent inflation data came in stronger than many expected.

In February, the Consumer Price Index (CPI) printed at 2.6%, a reading that could prompt the central bank to slow or pause further rate cuts. Bank of Canada Governor Tiff Macklem has also noted that monetary policy alone cannot offset the economic effects of a trade war, and the central bank will prioritize keeping inflation on target. For borrowers, the path forward will depend heavily on whether tariffs are implemented, how large they are, and how long they persist.

Read more about mortgages:

• Where to buy real estate in Canada
• The complete guide for first-time home buyers in Canada
• Tools to calculate your mortgage payments and costs in Canada
• Mortgage refinance calculator
• Mortgage renewal calculator