Analyzing How Mortgage Payments Have Outpaced Income Growth Over the Last Decade

The past decade has witnessed a concerning trend in the housing market, as mortgage payments have significantly outpaced income growth for many individuals and families.

This growing disparity raises questions about the affordability of housing and the financial strain placed on homeowners and renters alike.

Since the year 2013, the trajectory of home prices has been one of consistent ascent, a climb that witnessed a notable acceleration during the unprecedented times of the pandemic.

Simultaneously, interest rate Mortgage Canada, while maintaining a moderate steadiness until the year 2021, took a surprising nosedive to reach historic lows in Canadian history, only to rebound sharply, soaring to a 15-year high.

This dynamic interplay of factors has cast a shadow on the housing landscape, resulting in a palpable increase in monthly mortgage payments.

The real estate market, once considered a stable investment, has become a terrain marked by the complexities of fluctuating home values and the rollercoaster ride of interest rates.

Mortgage Payments Soar Over 100% in 10 Cities, Outpacing Income Growth of Just 16% or Less in the Last Decade

mortgage canada

In the past decade, monthly mortgage prices Canada have gone up in every city we looked at. Most cities saw an increase of over $1,000, and in four cities, the increase was more than $3,000 since 2013.

Over the past ten years, even though people in Ontario and British Columbia saw their average incomes go up, the monthly mortgage payments in these provinces increased a lot. In places like Hamilton-Burlington and Barrie District, the jump in monthly mortgage payments was the highest.

In 2013, if you were in Hamilton-Burlington, you’d pay around $1,680 a month for your mortgage. Fast forward to 2023, and that number went up to $5,034, a big increase of $3,354. Barrie District had a similar story, going from $1,442 in 2013 to $4,778 in 2023.

The average home prices in both these places shot up by more than $500,000 between 2013 and 2023, which is probably why the monthly mortgage payments also shot up. But here’s the catch – even though people in Hamilton-Burlington and Barrie District made more money over the years (an average of $6,300 more). It’s just a 12.8% increase, not nearly enough to cover the mortgage hike, which was almost 200% in some cases.

Next on the list were Victoria and Greater Toronto, where mortgage payments went up by more than $3,000. For Victoria, that’s a 158% increase, and for Toronto, it’s 129.8%.

While people in both these cities did see their incomes go up by more than $7,000, it’s only a 15.2% increase for Victoria and a 16% increase for Toronto.

Affordable Home Prices Acting as a Buffer, Keeping Mortgage Payments in Check Across Certain Cities

Bank of Canada Implements Modest Hike: Interest Rates Rise by 0.25%

In the midst of rising Canada home mortgage rates across the board, Saskatoon, Edmonton, and Regina stand out as the exceptions, experiencing less than a 50% increase.

These cities also saw relatively modest increases in home prices, with Regina’s prices going up by only $10,600 since 2013, allowing their monthly mortgage payments to rise by just $422 over the last ten years.

Regina, in particular, maintained a unique position with both home prices and mortgage payments seeing minimal growth. Despite a decrease in wages, from $52,800 in 2013 to $52,100 in 2021, Regina remained an anomaly in the housing market.

Edmonton and Saskatoon faced slight declines in wages as well, with Edmonton dropping by $100 and Saskatoon by $700. However, their home prices and mortgage payments stayed on a more manageable trajectory compared to the broader trend.

Calgary, while witnessing a drop in average income from $65,800 in 2013 to $61,400 in 2021, experienced relatively moderate growth in home prices and monthly mortgage payments.

In September 2013, Calgary’s average monthly mortgage payment reached $3,317, marking it as the highest outside of Ontario and British Columbia, yet still showcasing a more restrained increase compared to other metropolitan cities.

“By implementing effective policies and solutions, we can strive towards a more balanced real estate market Canada that aligns mortgage payments with income growth, ensuring a sustainable and affordable future for all.”

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