Canadians paying more for mortgages than they can afford

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Housing affordability was a major thorn in the side of Canadians in 2024, and it promises to hurt just as much in 2025, a new survey suggests, with the gap between what people say they can comfortably pay for mortgages and rent and what they are paying hitting astronomical spreads.

Two-thirds of those surveyed by pollster Leger for mortgage comparison site EveryRate.ca said they could afford monthly housing costs of $1,749, which is almost five per cent less than the national average monthly mortgage payment of $1,829, based on Canada Mortgage and Housing Corp. (CMHC) data. Almost four in 10 said they could only manage $1,000 a month.

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Even high-income earners, those making more than $100,000 per year, are hurting, with 42 per cent saying they can’t comfortably manage monthly payments higher than $1,749.

“What stood out to me in this survey was that even households earning over $100,000 a year are feeling the pinch, with nearly half unable to comfortably afford housing above $1,749 per month,” Andy Hill, a mortgage broker and co-founder of EveryRate.ca, said in a release.

A bit more than half of the survey’s 1,500 participants reported earnings of $60,000 or more, the majority had post-secondary education and 63 per cent were homeowners.

“That shows how pervasive this affordability crisis has become; it’s not just affecting low-income Canadians,” Hill said.

However, national mortgage averages only tell part of the story because they don’t distinguish between homeowners with “stable mortgages” and new buyers facing elevated home prices and interest rates.

“This makes the market seem more affordable than it actually is for most people,” EveryRate.ca said, with first-time homebuyers taking it on the chin, the survey uncovered.

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For example, first-time homebuyers in Vancouver face mortgage costs for an average starter property that are 137 per cent higher than what they are comfortable paying, while the gap is 119 per cent in Toronto, but 97 per cent in Montreal and 24 per cent in Calgary, two cities where housing has been perceived as more affordable.

Of the 20 cities on an EveryRate.ca list, only people in Edmonton and Saskatoon had payment levels lower than average mortgage payments — by 22 per cent and 10 per cent, respectively.

The mortgage payment information was based on average sold condo prices from the multiple listings service with a six per cent downpayment and 25-year amortization.

Robert Hogue, an economist at Royal Bank of Canada, said affording a home continues to be a stretch for average Canadians.

In the third quarter, Canadian households allocated 58.4 per cent of their income to cover mortgage payments, property taxes and utilities, down from an all-time high of 63.8 per cent in the fourth quarter of 2023, according to RBC’s quarterly housing affordability report released on Dec. 20.

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But only 30 per cent to 32 per cent of a household’s gross annual income should go to mortgage costs, property taxes, heating and condo fees, according to RBC.

Hogue said the slightly improved affordability was due to lower interest rates and higher wages, though he expects the impact from increased pay to fade.

“RBC’s affordability measures remain close to the worst-ever levels nationally and in many major markets despite this year’s improvement,” he said in the report.

EveryRate.ca also measured the gap between comfortable payment levels — as reported by survey participants — and actual payments for rent and new mortgages using Rents.ca and CMHC numbers for the provinces.

In British Columbia, the comfortable payment level was $1,787, while the average mortgage payment was $2,847 and the average rent was $2,549; in Alberta, the comfortable payment was $1,557, while average mortgage and rent payments were $2,057 and $1,786, respectively. In Ontario, the comfortable payment level was $1,619, compared to mortgage payments of $2,700 and average rent of $2,350; in Quebec, the comfortable payment level was $1,102, compared with mortgage and rent payments of $1,346 and $1,996, respectively.

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“Canadians are paying more for housing than they can realistically manage,” EveryRate.ca said. “This financial pressure forces many to make difficult trade-offs … leaving households more vulnerable to future economic shocks.”

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