For the last year and a half, mortgage rates have been hindering many Victorians, and people all across Canada, from purchasing their first homes.
However, according to Ratehub, a mortgage comparison platform and brokerage, both house prices and incomes needed to buy homes are coming down in many Canadian urban centres.
When comparing September to October, affordability improved in eight out of 10 of the markets they study, including Victoria.
Ratehub’s data for October 2023 indicates that for the average home in Victoria, a household would have to have an income of $186,550.
This data is based on what the average home costs currently in Victoria — $878,900.
According to Ratehub, for the first time in a long while, the average income needed has dropped $1,350, and the average home price has also dropped $6,500 over the last month.
The data indicates that the only cities in which the average incomes needed and home prices rose were Calgary and Halifax.
All data is based on a mortgage with 20% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating.
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Over the past year and a half, mortgage rates have risen at an unprecedented rate due to the actions of the Bank of Canada.
They have increased their overnight lending rate 10 times since March of last year to try to slow down spending in Canada, thus driving the rate of inflation down.
As a repercussion, mortgage rates skyrocket because they are directly tied to the Bank of Canada’s overnight lending rate.
Even though required income to buy a home has dipped slightly and so has the average cost of a home in Victoria, mortgage rates continue to be high.
Looking toward the future, if the Bank of Canada decides to increase rates again, mortgage rates will continue to climb. If they cut rates down because inflation has come down since this time last year, then mortgage rates may plateau and eventually drop down to a more typical level.
The Bank of Canada will be deciding whether to increase, decrease or keep the overnight lending rate the same on December 6th.