Canada Mortgage Payments Exceed Income Growth: Unveiling the Alarming Mismatch

Uncover the alarming mismatch between Canada mortgage payments and income growth. Explore the impact of rising interest rates and home prices on the Canadian real estate market.

Mortgage costs in Canada have been increasing at a faster rate than incomes over the past decade, a new report from Zoocasa has revealed. The analysis, published on Thursday, examined the average mortgage payments across 17 cities in Canada from 2013 to 2023, comparing these figures against average incomes. It highlighted that while home prices have risen during this time period, interest rates remained stable until recently, hitting a 15-year high after reaching historically low levels in 2021. As a result, monthly mortgage payments have increased, while income growth has struggled to keep pace, leading some potential homebuyers to step back from the real estate market.

Canada Mortgage Payments Exceed Income Growth: Unveiling the Alarming Mismatch | ogusyis

According to Zoocasa's findings, in 10 out of the 17 cities analyzed, mortgage payments have increased by over 100 percent, while incomes have only grown by 16 percent or less. The report pointed out that over the past ten years, average monthly mortgage payments have increased in every city examined. The majority of cities experienced an increase of over $1,000 in mortgage payments, with four cities even observing an increase of over $3,000 since 2013.

Despite cities in Ontario and British Columbia having higher average incomes, the report noted that monthly mortgage payments in these provinces have also risen significantly. Particularly, the Hamilton-Burlington and Barrie District regions were highlighted as having experienced the largest increases in mortgage payments. In Hamilton-Burlington, the average monthly mortgage payment rose by $3,354 over the past decade, reaching $5,034 in 2023 from $1,680 in 2013. Similarly, the Barrie District saw a similar trajectory, with the average monthly mortgage payment escalating from $1,442 in 2013 to $4,778 in 2023, representing a substantial increase of $3,336. The report identified rising home prices, which surged by over $500,000 between 2013 and 2023, as the main driver of increased mortgage payments in these regions.

The Greater Toronto Area witnessed a surge of 129.8 percent in mortgage payments during the analyzed period, while average incomes only rose by 16 percent. In Victoria, mortgage payments increased by an average of 158 percent, whereas incomes saw a mere 15.2 percent rise.

In conclusion, the Zoocasa report underscores the mounting mortgage costs in Canada, which have outpaced income growth over the past decade. The steady increase in home prices and the recent rise in interest rates have led to a significant burden on homebuyers, making it harder for them to enter the real estate market.