Canadian homebuyers finally received some good news this summer. According to recent market data, housing affordability improved in 12 out of 13 major Canadian markets in July 2025. The combination of slightly lower mortgage rates and a cooling trend in home prices has provided relief to households that have struggled with the cost of ownership for much of the past three years.

For a market that has faced intense affordability pressures since the pandemic, these signals mark a potential turning point.

What’s Driving the Improvement?

Experts say the improvement stems from two main factors:

Borrowing Costs: The average 5-year fixed mortgage rate dipped below 3.9% in July, down from peaks above 5% seen in 2023.
Stable Prices: Home prices across most provinces have stabilized, and in some regions (Ontario outside the GTA, and Prairie provinces), prices even fell modestly.

This combination has eased the monthly mortgage burden for many Canadians.

The Numbers Behind the Trend

A market report by a leading financial institution tracked affordability metrics across 13 markets

Region	Affordability Trend (July 2025)
Toronto	Improved slightly due to stable prices
Vancouver	Marginal improvement, but still Canada’s least affordable market
Montreal	Affordability improved, supported by wage growth
Calgary	Flat, as population growth keeps pressure high
Winnipeg	Improved, with lowest mortgage-to-income ratio among major cities
12 of 13 markets overall	Showed affordability improvement

What It Means for Buyers

For first-time buyers, the shift is significant:

Monthly payments for a $600,000 home (20% down, 25-year amortization) fell by $250–$300 compared to last year.
Some households are now re-entering the market after delaying purchases.
Government programs like the First-Time Home Buyer Incentive are becoming more impactful as affordability improves.

Expert Opinions

Economists say the trend is encouraging but warn that affordability is still stretched:

“This is a step in the right direction, but Canadian housing remains historically expensive,” said an RBC housing analyst.
Policy experts add that supply challenges—especially in Ontario and British Columbia—continue to limit true affordability.

Risks on the Horizon

While affordability has improved, risks remain:

If the Bank of Canada delays further rate cuts, borrowing costs could rise again.
Ongoing construction slowdowns could keep supply tight.
Regional variations mean buyers in Vancouver and Toronto still face some of the toughest affordability in North America.

Why It Matters for Readers

This update is crucial for anyone considering buying a home in Canada:

First-time buyers may find the window of opportunity they’ve been waiting for.
Existing owners considering upsizing or investing may see lower monthly payment projections.
Renters could also benefit if ownership demand eases rental pressures in key markets.

Housing affordability in Canada may finally be turning a corner. But whether this is a short-lived breather or the start of a longer trend will depend on interest rates, construction activity, and government housing policy in the coming months.

👉 Thinking of buying your first home in Canada? Talk to a Mortgage Expert today and get personalized advice on rates, affordability, and strategies tailored to your situation.