The income required to qualify for a mortgage on an average home in Vancouver has dropped a bit as Canada’s most expensive city for housing becomes slightly more affordable.
But that increased affordability may only benefit those who are already high earners. The income required to purchase the average home now stands at $214,000 annually. That’s down $4,500 from last month, according to a new report from RateHub.
That means both partners in a couple must earn at least six figures, or one partner must earn substantially more than $100,000 annually. Single buyers need a qualifying income above the $200,000 mark.
Of course, having downpayment help from parents (or other sources — such as a home you already own) reduces the amount you’ll need to borrow for your mortgage.
“For the second month in a row, Vancouver-area home buyers saw the largest improvement in affordability,” RateHub said. “This was largely due to home prices dipping slightly in the west coast city; the average price fell by $7,700 to $1,172,000.”
RateHub
The latest Bank of Canada interest rate cut has also improved affordability by allowing buyers to borrow more money without paying so much interest. It also eases the mortgage stress test.
RateHub forecasts further rate cuts by the federal government to improve affordability more in the months to come.
“The good news for borrowers is that mortgage rates are largely expected to trend lower; the Bank of Canada is anticipated to cut its trend-setting Overnight Lending Rate (OLR) once again in December, likely by another quarter-point,” it said. “That would bring this benchmark interest rate down to 3.5%, and, in turn, pull down the pricing for prime rates and variable mortgage rates, and other market-linked borrowing products.”