Mortgage rates improve housing affordability

There is an interesting article in the CBC about affordability of homes improving despite values increasing across Canada. From the article:

Housing across Canada became more affordable in the second quarter of this year because mortgage rates dropped, according to a report from RBC.

Even with prices moving higher, homes became more affordable in nearly every market across Canada, according to RBC’s Housing Trends and Affordability Report.

The least affordable markets were Toronto and Vancouver, where hot competition for properties kept home ownership out of reach for most buyers, despite a marginal improvement in the quarter. Vancouver is the least affordable market with sky-high prices, especially for single family homes.

There is also a statement indicating the stability of the Canadian housing market:

Rising rates would erode housing affordability across Canada and reduce demand, said Craig Wright, senior vice-president and chief economist. However he expects a slow rise in rates will lead to soft landing for housing.

“We remain of the view that any rise rates will be gradual and unlikely to unhinge either overall affordability levels or the market — we expect a cooling in activity, not a crash,” Wright said in a statement.

This report speaks highly of the Canadian housing market and is an indication of a good time to buy a home. With a fixed rate mortgage, you know the rate for the entire term, and variable rate mortgages continue to remain low and in many instances will work out better for home buyers who can qualify for a variable rate.